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.

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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 Daily Mail reports.

The rate of inflation is published each month by the Office for National Statistics (ONS) 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.

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.

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.

This post first appeared on thesun.co.uk