More energy price hikes predicted
Average annual energy bills have risen from £912 to £1,127 since the beginning of the year, but recent research has revealed more than 10 million households will struggle to afford the increase.
Families’ disposable income has dropped at the fastest rate since the 1970s this year, according to research from comparison site uSwitch. An increase in the cost of living has resulted from higher food, energy and borrowing costs over the course of 2008.
There have already been two waves of energy price rises this year, taking the average bill to £1,127 by uSwitch’s estimations. Consumers have been warned to expect further increases in the second half of the year, which could result in a total increase in household bills of 61% or £555 in 2008.
While one in 10 consumers believe they could put an extra £20 per month towards such costs, 13 million households are already planning to cut down on their winter heating to save on bills. The increases are hitting all age groups, with 44% of over 55 year olds, and 40% of 35 to 40 year olds and 45 to 55 year olds all claiming they cannot afford the extra costs.
Wholesale gas prices for this winter have increased by 89% on winter 2007. The comparison site believes all suppliers will announce further price hikes in the coming weeks. If predictions of a 40% increase in fuel bills become a reality, average household energy bills would rise to a crippling £1,467 – meaning spending on energy would account for 5% of the average household’s net income.
Ann Robinson, director of consumer policy at uSwitch, said: “The meteoric rise in the cost of living is affecting virtually every household and age group – it is leaving a hole in our pockets that pay rises alone cannot fill.
“With energy bills continuing to burn a hole in households’ dwindling pockets, consumers need to take steps to minimise their energy usage and reduce the amount they pay. Sourcing the cheapest provider is one means of holding on to the pennies but adopting more energy efficient measures will also help.
“This is not just a short-term spike. Consumers cannot afford to ignore this – they need to take action now to stand any chance of limiting the impact of higher prices. Online energy plans remain a good option for those who want to pay a lower price now.”