Britain’s households will have to spend a further £1,200 each year from as early as next year to cope with the rising cost of household bills according to a new forecast.
The startling revelation comes from uSwitch.com - the online price comparison service for utilities – which has launched a new 'spendable income index' that looks at the amount of spare cash households have left after tax and essential household spending.
The index was produced for uSwitch.com by the Centre for Economics and Business Research (CEBR)
The findings will come as a further blow to households - uSwitch.com’s consumer survey conducted by YouGov recently reveals 7 out of 10 people already feel that more of their cash than ever before is going towards household bills. And of these, a third (30%) find managing these bills puts a real strain on their finances.
The new index reveals that:
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The cost of servicing the household is rising. Price rises in utilities (water, gas and electric) building insurance, council tax and mortgage payments will have the biggest impact on our pockets.
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The cost of essential items is set to grow by 2.8% over the next year compared to an average growth of just 2% a year since 1995. However, this doesn’t take into consideration sharp rises in the price of petrol, wholesale gas and interest rates which would see households paying even more.
Andrew Salmon, managing director of uSwitch.com commented: “Households have become used to spending less on big ticket household items such as electrical goods and have also benefited from a decline in the cost of core household services in recent years.”
“However, that’s all about to change and people will need to start shopping around for cheaper goods and services, or be prepared to pay more for the lifestyle they have become accustomed to.”
Many key items such as gas, household consumables, contents insurance and water have been growing at a slower rate than the retail price index (RPI); while electricity, electric appliances and clothing have actually fallen over the past nine years. However, these areas are creeping up in price and look set to continue the upward trend.
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Table showing the annual average cost for household items from -1995 – 2003 and forecasted growth of these items over the next year |
Salmon added, “Its not all doom and gloom, there is some good news for households - telecoms costs are set to reduce over the next year as recent price wars – prompted by BT price changes - filter through to telephone users.”
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