New data from uSwitch has revealed sharp increases in the cost of household bills over the last five years, with pay increases of just 6% over the same period.
The research also found that more people are worried about the rising cost of living than about their health, with chancellor George Osborne urged to tackle spiralling household bills in next week’s Budget announcement.
Drivers among hardest hit
A shopping basket of essential household bills compiled by uSwitch shows that drivers have been the hardest hit over the last five years – the cost of fully comprehensive car insurance has risen 67% since 2008, from an average of £684 a year to a staggering £1,140 a year.
Hikes in petrol prices mean that a two-car family can now expect to spend £331 a month filling up their cars, up 33% from £250 a month in 2008.
The situation is unlikely to improve any time soon, with the AA predicting record high petrol prices by Easter.
Energy and water bills escalating
Energy bills are also a major cause for concern, with the average household now shelling out £67 a month for gas and £45 a month for electricity – increases of 52% and 32% respectively since 2008.
Water bills have not escaped the hikes, with homes now seeing average bills of £32 a month, a jump of 13% since 2008.
When it comes to housing, first-time buyers are facing an increasingly hard time getting on the ladder, with the average house price predicted to climb to £219,000 this year.
Food bills up, broadband down
Food bills have climbed 17% since 2008 with the average monthly shopping bill rising from £220 to £256. Prices have risen 4.5% in the last year alone, with vegetables up 8.4% and fruit up 7.2%.
Of all household bills, broadband is the odd one out, with average bills seeing a huge decrease of 68% since 2008. The average cost of standalone broadband is now just £5 a month, compared to £17 a month five years ago.
Unfortunately, this drop is offset by the cost of having a landline, which is up from £12 to £15 a month.
Rising livings costs the biggest worry
Against the backdrop of rising bills, average salaries have risen 6% from £24,900 a year in 2008 to £26,500 at the end of 2012. However, the real term value wages has actually fallen back to 2003 levels, with salaries down by 4.5% between 2007 and 2011.
Just one in two consumers (52%) have had a pay rise this year, with more than one in three (36%) having had their pay frozen for 12 months or more.
Over half of people (55%) feel the rising cost of living is their biggest cause for concern at the moment compared with health (29%). A further 39% are worried that they simply don’t have enough money and 18% are concerned about job security.
Expectations ahead of the Budget
Almost six in ten consumers (56%) fear that next week’s Budget will shatter their confidence even further.
Before tackling the UK economy as a whole, Brits say Mr Osborne’s priority should be addressing the price hikes – in particular spiralling energy and petrol prices – before stimulating economic growth and fixing the benefits system.
Two thirds of people (67%) would support the introduction of a ‘mansion tax’ on homes worth over £2 million, while 84% are calling for the personal tax allowance to be raised beyond £10,000.
Worryingly for the government, 85% believe that the chancellor doesn’t understand the financial fears of ordinary people, and 71% say that their financial situation has worsened since the Coalition came to power in 2010.
Chancellor needs to ‘ease strain on finances’
Michael Ossei, uSwitch personal finance expert, says: “Consumers are anticipating next week’s Budget with a mixture of dread and despair. Spiralling living costs are stretching household budgets to their absolute limit and people are running out of ways to fund their ever-increasing bills.
“With salaries failing to deliver, many are being forced into debt to stay afloat. Unfortunately, the most accessible forms of credit are often the most dangerous.
“People want the chancellor to show that he really does recognise the challenges they are facing and to help ease the strain on family finances. But consumers can also help themselves by looking at the options open to them.
“The first step is to take a long hard look at your household budget to see where you can cut costs – making sure you’re on the best possible deal for your home essentials will help you to ease the financial pain and to beat price rises.”