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Home insurance races ahead of inflation

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Home insurance costs are racing ahead of inflation with annual prices climbing 3.5% in the year to October.

The average annual home insurance premium now stands at £123, according to analysis by market research firm Consumer Intelligence.

Londoners pay the highest annual premium at £154 but prices are rising fastest in Eastern England at 6.6%. The lowest premium of £113 is paid in the South West.

The data found the price increases were driven by hikes to insurance premium tax.

Over 50s are seeing prices rise quicker than younger homeowners and pay higher premiums than under 50s at £131 compared with £119.

However, tough competition means annual premiums are still 9% lower than in February 2014.

Laura Crane, Consumer Intelligence client insight executive, said: “The insurance industry is contributing to a growing economic headache with the Insurance Price Index running massively ahead of Consumer Prices Index.

“However competition for business remains intense resulting in last month’s insurance premium tax rise from 9.5% to 10% largely being absorbed by insurers. Prices are rising everywhere with the over-50s facing the biggest increases and premium increases varying widely around the country.”

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