While there’s no doubt that living costs are heading strongly upwards, there may be some ways to reduce the costs in the coming months. Here are some ways to get started
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Struggling families are having to choose between heating their homes and feeding their children due to rising prices, one charity warned this week.
The Splice Child and Family Project said some people had hit “crisis point” due to the cost of living, with many struggling to keep up with food and fuel.
The cost of living surged by 5.1% in the 12 months to November, up from 4.2% the month before. This is its highest rate in 30 years.
Dr Steffan Evans, head of poverty policy at the Bevan Foundation, said as a result, some families no longer have acceptable living standards.
He said: “It means families are having to make really difficult choices and are not able to enjoy the living standards we all expect everyone to be able to have.”
So what can households do to mitigate the costs? We take a look at some of your options below.
How do you feel about the rising cost of living? Get in touch: firstname.lastname@example.org
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1. Energy bills
Soaring prices mean bills are predicted to rise by around 50% this spring.
How you could reduce costs: The Energy Saving Trust website may be able to help. Regulator Ofgem has advice on what to do if you can’t afford your bills. Make sure you are getting all the grants you are entitled to.
The Bank of England increased the base rate in December 2021 from 0.10% to 0.25%. This has had an immediate impact on homeowners on those variable rate deals which track the base rate.
Some may be considering locking into a fixed rate deal to give them certainty over their costs. But Moneyfacts has found fixed rates have also been creeping up.
The average two-year fixed deal increased from 2.34% in December 2021 to 2.38% in January 2022. For someone with a £200,000 mortgage, this could mean paying around £100 more over a two-year term. And the average five-year fix increased from 2.64% in December 2021 to 2.66% in January 2022.
This could mean someone with a £200,000 mortgage paying around £120 more over the five years, according to the comparison website.
How you could reduce costs: Eleanor Williams, a finance expert at Moneyfacts, says if borrowers are on their lender’s standard variable rate (SVR) or about to revert to it, they could potentially save some much-needed cash by switching.
“The best deal for a borrower will depend on their circumstances and future plans, so seeking the assistance of an independent broker could be invaluable in ensuring these are considered, and also in calculating the true cost of a new deal,” says Williams.
“It’s vital borrowers take into account more than just the initial interest rate on a new deal, but also consider any fees they may need to pay, and any incentives which they might benefit from,” she adds.
“Having the up-to-date market knowledge of a broker and having their support in navigating the mortgage maze could ease some of the potential stresses of applying direct and managing the application process through to completion.”
3. Rail fares and petrol prices
Some rail passengers may see annual costs increase by as much as 3.8%, depending on where they live.
Petrol prices dropped by 2p per litre over the month in December 2021, according to the RAC, although the organisation claimed consumers should have seen a bigger fall in pump prices than this due to falling wholesale prices.
How you could reduce costs: The petrolprices.com website compares nearby fuel prices.
Booking in advance, using railcards and splitting tickets across long journeys rather than buying one for the whole journey may be ways to save some cash.
You could also try cashback websites. For example, Quidco and TopCashback have cashback offers for people using the Trainline to book online.
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Tips to save on fuel
1. Fill up at busy petrol stations
These stations buy more fuel and can take advantage of falling prices. “The big petrol stations have deliveries every day so they can change the price,” Arthur Renshaw, of petrol station analyst Catalist Experian, told The Mirror . “But a small petrol station in a village may have a delivery every couple of weeks.”
2. Choose a big station
Stations buy their fuel on the wholesale market. Just as in any other negotiation, the big buyers are better able to strike a deal.
3. Look for a cluster of stations
When several stations are close together, they are more likely to cut prices to tempt drivers in. “If you are in the Highlands and Islands of Scotland, you have much less competition than in the centre of Manchester,” said Renshaw.
4. Play the supermarket game
Supermarkets are competing on fuel prices along with everything else. When you’re shopping, keep an eye out for vouchers offering petrol discounts. But be aware of the overall cost.
6. Stop by provincial towns
Airports, motorways, expensive cities and rural areas have the highest charges, so its worth avoiding these unless absolutely necessary.
Insurance costs have remained relatively low, and in the case of car insurance this is partly due to fewer cars having been on the roads during coronavirus lockdowns. But there have been some recent signs of motor insurance prices starting to increase, for some customers at least.
While the average motor premium is still 20% below a peak reached in 2017, prices for the over-50s started to creep up towards the end of last year, Consumer Intelligence found.
How you could reduce costs: New rules came into force at the start of this year, meaning insurers are now required to offer renewing customers a price that is no higher than they would pay as a new customer.
This should remove the ‘loyalty penalty’ customers pay for sticking with their insurer year after year. However, it’s still worth shopping around and looking at comparison websites as well as talking to insurers directly.
Grocery price inflation added nearly £15 to shoppers’ average monthly grocery bills in December, according to data analysts at Kantar.
Global supply chain issues have been putting price pressures on what’s on the shelves.
How you could reduce costs: Swapping regular favourites for own-brand grocery products may help.
Making a strict shopping list, bulk buying and using stores’ loyalty schemes could also produce savings.
Shopping for goods at times when items are being marked down, and using food waste apps may also help.