Ways to fight back against these sneaky price hikes
Official figures may suggest that inflation has fallen to nearly zero, but many ordinary people will beg to differ.
They are struggling to meet everyday living costs as incomes stagnate and the returns on their savings collapse. Inflation stood at just 0.3 per cent in the year to February according to the consumer prices index (CPI), but to many people it feels far higher.
Everyday life has just become even more expensive in the wake of “national price hike day” on Friday, when Britons were hit with a host of inflation-busting price increases on essentials.
Council tax, postage stamps, prescription costs, dental charges, mobile phone tariffs and flights all went up, squeezing people’s wallets.
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They all add up and lead to fewer pounds in your pocket
For many the biggest shock will be their council tax bill, which rises by an average of 3.10 per cent across England and Wales. Some will leap nearly four per cent, more than 13 times the CPI inflation rate.
NHS dental charges for check-up treatment rose by five per cent on Friday, while prescription costs increased by 2.44 per cent, up 20p to £8.40. Even the cost of taking a bath or a shower has gone up, with the average household now spending £389 a year on their water bill.
Hannah Maundrell, editor-in-chief at financial comparison site Money.co.uk, says these are just some of the price hikes that came into force at the start of this month: “They all add up and lead to fewer pounds in your pocket.”
Chancellor George Osborne is playing his part, with stealth tax hikes, such as the increase in insurance premium tax (IPT). This was raised in November, adding £100 a year to the average family’s motor, household, pet and private medical insurance bills. He increased IPT again in his Budget last month.
On Friday another stealth tax, air passenger duty, rose three per cent, adding up to £4 to the cost of a long-haul flight. Mobile phone operators are also pushing up the cost of their contracts. Customers on legacy plans with Three have seen their bills double from £15 to £30 this month, and both O2 and EE have introduced CPI-busting payment increases.
Pay TV company Sky recently announced a raft of price hikes, which will take effect on June 1 and add eight per cent to the cost of its packages. Maundrell says media hype about low mortgage rates and low inflation is leading people into a false sense of security and they need to take charge of their money again: “Whilst you cannot avoid rising postage costs and NHS charges, you can control the cost of many other things, like your phone or pay TV contracts.”
If you are struggling to pay your council tax bill, check whether you are eligible for council tax benefit, which is designed to help people on low incomes and with few savings. Those living alone should ensure they claim the single person discount, which knocks 25 per cent of your bill. You can get a similar discount on your water bill.
Many people may be paying too much because they are in the wrong council tax band.
Incredibly, valuation bands in England and Scotland are based on property values in 1991, rather than today, while valuations in Wales were made in 2003.
Maundrell says: “It is hardly surprising that many could be paying the wrong amount.” Last year, 53,000 people challenged their council tax band and won £4million in reductions.
More than two out of five got their bill reduced, saving around £276 a year. The payment is backdated so if you have lived in the same home for many years you could get thousands. Find out more by visiting website Gov.uk and searching for “council tax appeals”.
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Maundrell says: “Check carefully as there is the danger you could be moved into a higher band, although only one in a thousand of all challenges resulted in an increase last year.”
Ann Robinson, director of consumer policy at comparison site uSwitch.com, says you can do your bit to fight back against the price hikes by spending just a few minutes shopping around for a better deal. “People often do not realise just how much can be saved by switching, be that energy supplier, broadband provider or mobile phone tariff.”
Broadband and home phone prices have sneaked up by an inflation-busting 40 per cent since 2011. Loyal broadband users now pay £103 a year more than in 2012.
Robinson says: “Be aware when your contract ends and compare rates to find a cheaper deal, as you can save up to £151 a year.”
Seven out of 10 households are on the most expensive standard variable tariffs by one of the big six energy suppliers British Gas, EDF Energy, E.On, Npower, ScottishPower and SSE.
Robinson says: “Our users save on average £337 a year by switching, while one in 10 saves £567 or more.” Older people will be in a better position to keep up with rising prices if they claim all the state benefits to which they are entitled.
New figures published last week show that six out of 10 fail to claim key welfare benefits, losing £797 a year on average, and in one case £6,890. Take-up rates are worsening and many pensioner homeowners do not realise they can apply for state support.
Stephen Lowe, communications director at Just Retirement, which conducted the research, says the numbers failing to claim state help has risen for the fifth year running.
“Many are struggling to make ends meet without knowing that hundreds of pounds a year is available.”
In the war against sneaky price hikes it pays to keep a close eye on all your incomings and outgoings.
