the Government is funding energy firms to cut bills by £200
Britons are set to face heftier bills as inflation heads for a 30-year high.
The energy price cap has increased by nearly £700 while interest rates have increased to 0.5% in their second rise in just seven weeks.
National Insurance is set to increase by 1.25 percentage points in April 2022 while petrol prices are up by more than a quarter in a year.
The average household will spend £139 more on food per year and an extra £51 on clothing and footwear.
When combined with other factors, the total rise is set to be £2,853.
Things are more expensive as Covid-19 has hit global supply chains.
A combination of pent-up demand and delays to shipping as factories across the world face lockdowns and worker absences.
This has led to prices rising, especially for raw materials.
The average price increases are:
- Energy bills – £693
- Interest rates – £650
- National Insurance – £254
- Council tax – £40
- Petrol – £311
- Running a car – £406
- Rail fares – £67 per year
- Tax band freeze – £136
- Food and drink – £165
- Clothing and footwear – £51
- Household goods and health products – £178
Unsurprisingly, this has caused a lot of concern among citizens who are worried that they will struggle to pay bills and for provisions.
Hamza said: “The rising energy bills are set to turn a cost-of-living crisis into a catastrophe.”
Author Dr Rakib Ehsan said: “The UK is on the verge of a cost-of-living catastrophe and is already the leading major country when it comes to environmental protection measures.
“The Gov’s decision to increase National Insurance should be reversed and environmental levies on energy bills should be removed.”
As a result, the Government has outlined its plans to help, with Chancellor Rishi Sunak unveiling a £9 billion cost of living crisis package.
He said: “Without Government action, this could be incredibly tough for millions of hardworking families.
“So the Government is going to step in to directly help people manage those extra costs.”
Here are some of the living factors affected by inflation and ways to get help.
Energy & Food Bills
Energy and food bills are two of the main things UK households pay for.
However, the energy price cap will rise 54% for millions of people in April 2022, meaning average costs will rise from £693 to £1,971.
Food and drink will increase to an extra £165 a year.
To help UK households, the Government is funding energy firms to cut bills by £200 in 2022.
The reduction will be automatically applied to bills from October.
But it will then be recovered by adding £40 to annual bills for the next five years, starting in 2023.
For those struggling, it is a good idea to check out British Gas Energy Trust, which is a charity set up to support families and individuals facing financial hardship and energy debt across England, Wales and Scotland.
Its social enterprise, IncomeMax, has produced a Bounce Back Checklist that details benefits, grants and organisations that can help.
Households struggling to pay food bills can seek a local foodbank. In addition to food, a foodbank can also provide household items like toiletries.
The cost of living crisis will also see an increase in council tax.
Most councils will increase rates by up to two per cent, meaning average bills will be pushed up to £40 per year.
Mr Sunak promised that households in council tax bands A-D will receive a £150 rebate from April, something he said would benefit 80% of all homes in England.
It will be applied directly by local authorities, and will not need to be repaid.
Mr Sunak also promised £144 million to councils to support vulnerable people.
While this will help, it will not happen until April. This means some households will struggle to pay their council tax.
For help, apply to your local council for Council Tax Reduction. If you’re eligible, you will get a discount on your bill.
Millions of homeowners face mortgage bill hikes after interest rates rose to 0.5%.
For example, buying a house for £276,000 with an 80% loan on a tracker rate will mean extra repayments of £552 per year.
If you are a homeowner and struggling to pay your mortgage bill, you might be able to get Support for Mortgage Interest (SMI).
This provides help towards interest payments such as a mortgage.
It is paid as a loan, which is repaid with interest when you sell or transfer ownership of your home.
An alternative is to visit Money Helper, which provides support on everything related to mortgage repayments.
You can visit the website or call the helpline – 08000113797.
Because interest rates have increased, it also means that for some, it will be more difficult to keep up with credit card bills.
The interest rate increase to 0.5% on top of the existing interest rate credit card providers offer can be concerning for some.
But there are a number of avenues to explore if you need advice or support.
The obvious option is to speak to your bank.
They will advise you about the risks involved with credit cards and should you fall into difficulty keeping up with repayments, they will discuss the next steps that are best for you.
Another option is Money Supermarket, which outlines steps to get your finances back on track.
UK charity Debt Advice Foundation offers confidential support and advice to anyone worried about loans, credit and debt.
The cost of living crisis has worried UK citizens.
But there is a lot of support websites and helplines that will provide guidance on different aspects of finance.
Some things you can do include coming up with a budget and making savings where you can.
So if you do find yourself financially struggling, do not hesitate to get help.