CHESTER, England, June 14, 2011 /PRNewswire/ --
- A Quarter of UK Consumers Struggle to Make Ends Meet
- Energy Price Hikes add to the Nation's Soaring Living Costs
Today's announcement by the Bank of England that inflation remained at 4.5 per cent, offers some respite for consumers from another sharp jump in the cost of living and the 'squeezing' effect of rising prices on household budgets. However, the high cost of living continues to be a problem for families with recent announcements of August energy price increases meaning most households will need to batten down the hatches on their finances in the coming months.
Research from moneysupermarket.com* reveals weekly outgoings for the average British adult rose by GBP54 over the past six months. Worryingly, the research showed almost a quarter of those surveyed (22 per cent) had already reached their 'affordability tipping point', and would be unable to cope if their monthly expenditure was stretched any further. Today's announcement that inflation remains high will heap more pressure on those already unable to cope.
The research also found that one in five (19 per cent) of Brits felt bills such as heating were placing the biggest strain on their household finances. Scottish Power has recently announced 19 and 10 per cent price rises to gas and electricity respectively, adding GBP175 to the average cost of a yearly bill for 2.4 million households, which comes into effect in August. With other providers expected to unveil price hikes, millions more struggling consumers will feeling the effects of rising prices over the coming weeks and months and place further strain on the nation's finances.
Kevin Mountford, head of banking at moneysupermarket.com said: "The sharp sting of high inflation is not new to UK households, as consumers have battled with the rising cost of living over the last 12 months. Energy hikes, the soaring price of petrol and the rising cost of everyday basics such as food, have hit households hard. Many workers also have to deal with pay freezes, meaning their incomes are actually dropping in real terms, it is no surprise many feel like their finances are either at, or rapidly approaching breaking point.
"Inflation is still having a huge effect on the nation's savings pots. To beat inflation, basic rate tax payers need an account paying at least 5.63 per cent to gain benefit in real terms from their savings, increasing to 7.51 per cent for higher rate tax payers. The low number of products currently offering a return above inflation, means keeping a closer eye on their interest rates and being prepared to switch is more important than ever. Even if savers can't beat inflation, the difference between the average and top paying rates is considerable, so switching to a better deal can help to limit the erosion.
"Those who need to free up some cash need to sit down and consider all of their outgoings. In addition to looking at day-to-day spend items like groceries and petrol, look at some of your bigger costs, including heating, car and home insurance, and review your financial products like credit cards and savings accounts. Using a comparison website to shop around can help people to ensure they are on the best product for their individual needs, allowing them to make big savings where it counts."
Notes to Editors:
* Opinium Research conducted research between 15th and 18th April 2011, amongst 2,170 nationally representative adults aged 18+
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