The cost of living crisis is having a huge impact on the majority of households in the UK, with food, petrol and energy bills all rising in price. In April Ofgem increased the energy price cap by 52%, meaning the average household would be forking out almost £700 extra a year on their bills, totalling just under £2,000.
On Wednesday (25 May) the regulator announced that the price cap would be rising yet again this time to £2800, totalling an increase of another £800. Whilst addressing the House of Commons today (May 26), Chancellor Rishi Sunak acknowledged the situation has worsened and announced that every household in the UK will receive a £400 discount on their energy bills as part of a new grant.
Although this may help homeowners to stretch their money a little further, many have little room for manoeuvre in their budgets as living cost pressures continue to worsen.
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According to figures released by Nationwide Building Society this week, households went out of their way to spend much less in April – but the overall amount they spent did not drop – in what the society described as a 'clear sign' of the impact of rising prices.
Office for National Statistics figures have also shown inflation soaring to a 40-year high, reaching 9% in the year to April – a figure which is expected to hit double digits in the coming months.
A further string of cost increases took place in April, including rises in council tax, a 1.25 pc rise in national insurance increase to help pay for health and social care, and a rise in the energy price cap.
The typical cost of filling up the car has also jumped to record levels, with a full tank of unleaded now close to £94 and diesel almost £100 according to an RAC fuel spokesman.
House prices have also hit record highs, making life tougher for first-time buyers trying to get on the property ladder, with Rightmove revealing average asking prices for homes across Britain have soared by £55,551 in the past two years.
But despite the consistent rises in price that we are witnessing everywhere, it turns out that some household bills have actually gone down recently.
One area of spending where people may find their costs have reduced is for home, contents and motor insurance.
In the first quarter of 2022, the average price paid for building insurance was £225. This fell annually by 7% and is the lowest average price recorded since the Association of British Insurers (ABI) started collecting this data in 2012.
The average price paid for contents insurance, which is now £114, also fell by 11% annually. Like buildings cover, this stands at its lowest since ABI started collecting the data.
The average price paid for comprehensive motor insurance in the first quarter of the year was £416. This is a 5% drop compared with the first quarter of 2021, the ABI said.
But in a worrying sign of the times, insurance giant Aviva has said it is expecting to see more fraudulent insurance claims, especially on home, small business and liability insurance policies, as cost-of-living pressures bite.
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