Inflation ‘set to cost families £1,800 by the end of the year’
INFLATION is set to cost families £1,800 by the end of the year, new research has revealed, leaving households scrabbling for cash.
The rate of inflation is set to top 4% for the first time in a decade - and is already at a three-year high.
Inflation is a measure of how much the prices of goods and services have changed over time.
The spike has been driven by soaring fuel and food prices as supply chain issues continue to hit businesses and increase demand.
It means that a typical family of four could have to stump up an extra £1,800 to foot the jump in bills, according to the Centre for Economics and Business Research (CEBR).
Lower income couples could be hit by £900, while retired couples will have to fork out £1,100 more.
The rate of inflation is published each month by the to indicate what has happened to prices over the past year.
The ONS collects around 180,000 prices of about 700 goods and services used across the country.
The Bank of England has a target to keep inflation at 2%. But inflation soared to 3.2% in August and this week the Bank warned it could reach 4% by the end of the year.
Rising inflation means that your money won't go as far.
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If a loaf of bread is £1 this year and inflation is at 4%, the same loaf will cost £1.04 next year.
That might not sound like a big deal, but if the same thing happens to everything in your weekly supermarket shop and all of your household bills, it can have a major impact.
At the same time, inflation erodes away the value of any savings you have.
So if you have £100 in the bank this year and inflation is 4%, the real spending power of that money is reduced to £96 next year.
A CEBR spokesperson said: "Our estimates show the extent of the upcoming squeeze in living standards, with UK households having to pay hundreds of pounds more for the same consumption basket compared to a year ago.
"Three areas in particular will hit consumers’ wallets: With oil and gas prices rising, households should expect to pay significantly higher prices at the pump and to heat their homes over the winter.
"Moreover, a shortage of key workers, from lorry drivers to fruit pickers, surging shipping costs and high international food prices could easily mean higher prices for groceries by year-end."
What costs have gone up?
Families will already have seen the cost of simply getting by soar recently.
Households who already grappling with spiralling energy bills - around 11 million households saw their bills shoot up by £139 at the start of this month.
This is because energy regulator Ofgem increased the energy price cap to £1,277.
The cost of petrol has also jumped as the ongoing fuel crisis continues to wreck havoc for drivers across the country.
Petrol prices have reached an eight year high of £1.36 a litre, following misery on the roads last week when it was revealed up to 90% of forecourts were dry in some areas around the country.
However, drivers accused petrol stations last week of ramping prices up to as much as 154.9p a litre.
Getting your groceries is also getting more expensive.
Shoppers were warned last month of rising prices made worse by potential food shortages in the run up to Christmas.
Morrison's has already warned of price increases due to the shortage of HGV drivers.
Travel is also on the up too. Train passengers are bracing themselves with a rise of nearly 5% on their ticket prices.
That's the largest hike seen in a decade.
If you're travelling further afield, then be prepared to fork out much more for going abroad.
Holiday goers could face a 15% rise in prices next year - with some flights in Easter said to be about a fifth more expensive than 2019 pre-pandemic levels.
How do I beat the hikes?
With prices soaring for bills and goods, you'll want to know how to beat the hikes.
For household bills, including your energy bills, don't shop around for a fixed energy tariff at the moment as prices are high and suppliers keep on collapsing, experts have warned.
If you are currently on a fixed tariff make sure you put a note in your diary reminding you to shop around for a new deal a month before your existing one ends.
Make sure you take advantages of any allowances, too.
If you’re on a low income or receiving benefits, you could be eligible for the warm home discount, which gets you £140 off your bills during the winter months.
The cold weather payment is a £25 grant for people on certain benefits when the temperature drops below zero for seven days.
Reducing your food bill can help soften the blow of rising prices.
Shopping own brand products is one easy way to cut your grocery bill but shoppers should also make use of loyalty schemes like the Tesco Clubcard or Sainsbury's Nectar card.
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If you’re worried about the cost of your shopping, you can also get help from your local food bank. Websites such as the can help you locate a food bank near you.
Parents may also be able to get free school meals for their children.
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