Average household costs to rise by £1,700 a year

[dutchman]

A typical family’s household costs are set to go up by £1,700 next year, according to analysis



The study said that higher fuel and energy prices were mainly responsible for the projected £33.60 per week increase in the cost of living. They would be compounded by a surge in supermarket bills that has not yet been pushed through because the grocery industry does not want to risk losing customers at the crucial Christmas shopping period.

The study by the independent Centre for Economics and Business Research (CEBR), conducted for this evening’s BBC Panorama, projected that the inflation rate would rise to 4.6 per cent by Christmas.

Demand for crude oil and gas has been pushing up energy costs worldwide as economies emerge from lockdown, and bottlenecks in supply chains have added to upward pressure on other prices.

The current rate of inflation is 4.2 per cent in the UK, and the Bank of England has forecast that this will peak at 5 per cent in the spring, though it says this will be transitory only. The next release date for inflation data — for November — is December 15.

The surge in inflation, which has been much higher than the Bank expected earlier in the year, has given rise to a heated debate on whether it needs to raise the base rate from its three-centuries low of 0.1 per cent. The Bank has a target to keep inflation at 2 per cent in the medium term.

The CEBR figures were based on spending by a typical family with two adults and two children. It looked at the prices of commonly bought items, including food and drink, clothing and household goods. It also includes spending on utility bills such as fuel and power, transport costs, and money spent on recreation and days out.

Economists believe the country is heading for a cost of living squeeze next year, though its acuteness will depend on how much wages rise to compensate.

The price of margarine is up by 15.6 per cent in the past year, yoghurt by 9.7 per cent and lamb by 8.5 per cent, according to the CEBR analysis of shopping trolley costs. Crisps are up by 6.9 per cent and butter by 6.4 per cent.

However, price increases of Christmas products were much more muted, with turkeys up by 1.3 per cent and Christmas puddings by 0.5 per cent on a year ago. Sprouts are down by 0.3 per cent and mince pies down by 1.1 per cent.