SQUEEZED Brits face a brutal “Black Thursday” of price rises hitting millions of families.
As the cost of living crisis bites, households face a quadruple whammy tomorrow with:
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- Average gas and electric bills hitting £2,000 a year as the Government’s price cap is raised.
- Mortgage payments going up as interest rates set to double from 0.25 per cent to 0.5 per cent – the second increase in two months.
- Shoppers hit by the highest price rises in nearly a decade
- Petrol prices to rocket to record levels.
Consumer expert Martyn James said: “It’s going to be Black Thursday. Millions of households across the UK are waking up to the reality of huge energy price rise hits, while inflation inches ever up and all the main bills we pay look set to rise.
“Whatever you do, don’t panic – there is help out there. But the Government need to know that it’s nowhere near enough for millions of hard-up people.”
Energy watchdog Ofgem was forced to bring forward its planned price cap rise on gas and electric bills to today as Boris Johnson’s Government scrambles to move on from the Partygate saga.
Suppliers will be allowed to hike the basic tariff for 22 million households, meaning families are set for huge increases in bills.
Experts last night predicted capped energy tariffs will shoot up by around 50 per cent to £1,915 for the typical customer as a result of today’s announcement.
Another rise is expected in autumn when the price cap is likely to go up yet again. Chancellor Rishi Sunak, under pressure to scrap VAT on energy bills, will today announce a series of measures to try to ease the pain for hard-pressed families.
He will lay out a major “Rebate and Repay” scheme to give every household in the country cash back.
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‘Four rate rises’
AN interest rate rise today is expected to be the first of three or four this year.
And it is likely to rise gradually to 1.5 per cent to try to bring inflation to the Bank of England’s two per cent target, City experts believe.
It comes as a poll shows five of nine economists want rates to rise from 0.25 per cent to 0.5 per cent. Two want them at 0.75 per cent and two suggested one per cent. The 0.75 per cent rate would add £61 a month and £732 a year to repaying a £250,000 mortgage.
Any increase today would be the Bank’s first back-to-back interest rate rises since 2004. It raised them in December from historic lows of 0.1 per cent.
Consumer Prices Index inflation hit 5.4 per cent in December, a near 30-year high.
AJ Bell head of investment analysis Laith Khalaf said: “A rate hike would help to persuade the market that the Bank means business and to stave off inflationary expectations.”
Ministers will underwrite billions of pounds worth of loans to energy firms to dish out to their customers — to be recouped over time.
The so-called “smoothing” mechanism will mean Brits pay less now when prices are high, but face paying back huge sums over several years.
And the winter scheme may only be extended from the end of the year, leaving months of pain for struggling households.
In a bid to stop the poorest Brits choosing between heating and eating, he is also expected to extend the Warm Homes Discount too.
The Treasury has also been eyeing up plans to force councils to cap council tax bills, or increase benefits payments to help ease the cost of living squeeze facing millions.
Last night critics rounded on the plans, which were still being ironed out yesterday, saying the help was just a drop in the ocean for millions of families.
One Tory minister admitted last night: “Whatever the plan is, it just won’t cover the whole rise.”
Julian Jessop, Economics Fellow at the Institute of Economic Affairs think tank, said: “It would still be better (and potentially less expensive) to target more support at those that really need it.
“The savings being suggested would still leave many poorer families struggling with their bills.”
National Energy Action’s chief Adam Scorer hit out: “The ‘heat now, pay later’ plan, in isolation, will not be sufficient to protect the most vulnerable customers.”
Last night the Resolution Foundation warned up to 6.6 million households could be forced into fuel poverty. The massive rise in the energy price cap comes as interest rates are set to at least double, clobbering families with bigger mortgage repayments.
The Bank of England will update its forecasts today and is expected to hike interest rates by at least 0.25 per cent to 0.5 per cent.
But some economists have called for an increase to 0.75 per cent to tackle spiralling inflation which could hit six per cent by April.
Yesterday annual shop price inflation jumped from 0.8 per cent in December to 1.5 per cent in January, according to the latest BRC-NielsenIQ shop price index.
It said the increase was at its highest rate since 2012. Food price inflation rose from 2.4 per cent in December to 2.7 per cent in January, as price rises reached the highest rate since October 2013.
Non-food inflation rose to 0.9 per cent in January compared to 0.2 per cent in December.
Helen Dickinson, chief executive of the British Retail Consortium, said: “January saw shop price inflation nearly double, driven by a sharp rise in non-food inflation.
Food prices continue to rise, especially domestic produce which have been impacted by poor harvests, labour shortages, and rising global food prices.” The inflation shock came as the RAC warned that “storm clouds are gathering” over rising petrol prices.
Pump prices are expected to rise again soon as the cost of crude oil sticks at around $90 a barrel, a seven-year high. It means the costs of petrol and diesel have risen by 26.8 per cent in a year.
Given that the average household spends £22.30 per week on fuel, that means an extra £5.98 a week, or £311 a year. RAC fuel spokesman Simon Williams warned yesterday: “Storm clouds are gathering, however.
“With oil now having traded above $90 for a week – the highest price for more than seven years — wholesale fuel costs are once again increasing, which will undoubtedly lead to retailers putting up forecourt prices.
“Our message to the biggest retailers, which lead the market, is to treat drivers with respect by fairly reflecting the movement in the wholesale fuel market and not taking overly high margins.”
‘Maggie would’ve favoured tax hike’
Exclusive by Harry Cole, Political Editor
BORIS Johnson says National Insurance has to go up in April because “one in ten” Brits is waiting for hospital treatment — and that Margaret Thatcher fans should support it.
He said so much was spent tackling Covid, the need to balance the books could not be ignored and that legendary former Tory PM Maggie would have approved of the move.
Mr Johnson warned that six million were now waiting for some sort of treatment and that figure is set to double as the NHS struggles in the wake of the Covid pandemic.
The PM told critics to think of “the suffering that goes with that”.
He has been under huge pressure to ditch the planned 1.25 percentage point raid on workers’ wages to help ease the cost of living crisis.
But the PM told The Sun it was an inevitable consequence of the “massive, massive expenditure we saw” during Covid — and that our “country deserves better care”.
He continued: “Spending that money was essential, but it was a huge drain . . . and a country has got to pay its way.”
Risking a fresh row with Tory MPs, he claimed fans of the late Lady Thatcher should back the hike.
He said: “To all the Thatcherites and all those who believe in a low tax economy, (Chancellor) Rishi Sunak and I both believe in exactly the same agenda.
“We are also Thatcherites in that we believe in sound money. We are responsible Conservatives so we have to do the right thing.”
In the Commons yesterday, Labour leader Sir Keir Starmer mocked Mr Johnson’s claims of being a “low-tax Tory”.
He quipped “Why do these alleged tax-cutters keep raising taxes on working people?”.
He added: “Isn’t it the case that he and his Chancellor are the Tory Thelma and Louise, hand in hand as they drive the country off the cliff and into the abyss of low growth and high tax?”
Mr Johnson hit back saying that it was all about dealing with the consequences of the pandemic and an unprecedented economic crisis.
