FAMILIES are braced for their bills to rise by almost £1,200 a year even as inflation has fallen, a think tank has warned.
Research by Retail Economics found that 84% of households are expecting the costs of essentials such as food, electricity and fuel to rise by the end of the year.
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Consumers are typically expecting to shell out an extra £22.60 a week to cover the cost of essentials – adding up to £1,175 a year.
Households have already seen food prices rise amid shortages in recent weeks.
Spiralling wholesale gas prices are also adding hundreds to energy bills.
And the cost of petrol has hit an eye-watering £1.40 a litre for the first time in a decade.
In total, UK households will be shelling out an extra £627 million a week as the cost of living crisis starts to bite, Retail Economics calculates.
Latest figures showed that inflation eased slightly to 3.1% in September, down from 3.2% the previous month.
But experts have warned this could be a temporary reprieve, with some forecasting inflation to reach 4% by the end of the year.
The biggest contribution to today’s inflation numbers came from rising transport costs, with household services, restaurants and hotels, and recreation and culture also in the mix.
Retail Economics found that 67% of those surveyed are concerned about the rising cost of living, up from 54% just a month ago.
Worries about inflation are at their highest level in more than five years.
Nicholas Found, senior consultant at Retail Economics, said: “Households are bracing a hefty squeeze on their personal finances heading into Christmas.
“Consumers have faced fuel shortages, delays in receiving goods and energy price increases in an incredibly short period of time.”
He warned that rising costs were likely to hit low income families the hardest.
Inflation is a measure of how much prices are rising. If inflation is 3%, it means that something that costs £1 today will cost £1.03 in a year.
That might not sound much, but if it happens across your entire shopping basket it starts to add up.
It also eats away at the spending power of money in the bank.
If you have savings of £100 and inflation is 3%, then your money will only be worth £97 in a year.
At the same time, rock-bottom interest rates mean savers can’t grow their money to stave off the effects of inflation.
Currently, the best easy-access savings account pays a measly 0.65% in interest, according to Moneyfacts.
How to keep costs down
Millions of people across the country are feeling the pinch right now, but there are things you can do to try and keep costs down.
We have rounded up some of the help you might be eligible to receive, including a council tax discount or access to a household support fund.
Universal Credit claimants may be able to get help with bills after the uplift left many families struggling to cope.
It’s also worth considering how you can save money in every room of the house to save on energy, from insulating your loft to using a simple draft excluder.
Hundreds of thousands of households have seen their energy supplier collapse in recent weeks, which could mean higher bills.
But you can still apply for the Warm Home Discount Scheme to get £140 off. And we have looked at what you can do when your energy company tells you to increase your direct debit.
When it comes to the food shop, it’s important to make use of any loyalty schemes and keep your eye out for reductions. We’ve rounded up six easy ways to cut your grocery bill.
As well as keeping costs down, you should do your best to get the best savings rates available to try and grow your money.
Round-up accounts let you save your spare change, and the pennies can really add up over time.
You might also be able to get a better savings rate by tying into a fixed rate account – but only do this if you know you won’t need the money for that time.
You can get 1.81% on a three-year fixed rated bond with JN Bank and 2.05% on a five-year bond with Gatehouse Bank.
Rachel Springall, finance expert at Moneyfacts, said: “Savers would be wise to consider switching their account if they are receiving a poor rate of interest, as some of the top savings deals have improved since the last inflation announcement.”
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