Inflation could hit 7% this year as British consumers are hit with soaring food and petrol bills, according to Chelsea Building Society.  

Recent research from the society showed the annual rate of inflation could hit 7% for the first time in 17 years. It found household energy costs, food bills, petrol prices and rental payments account for 33% of all individual expenditure, however these are the very items for which prices are currently rising.

Energy providers have recently reported rises of up to 35% for gas and 22% for electricity. Rental payments could potentially rise by 9%, according to Chelsea and petrol and food prices could rise by 34% and 12% respectively this year. Even if all other goods and services maintain their current rate of inflation, the research predicted these increases alone could push annual inflation to almost 7%.

Darren Stevens, director of customer services at Chelsea Building Society, said: “The potential increase of real-time inflation to almost 7% will create a real strain for the average man and woman on the street. Recent fuel hikes, food increases and rental demands are forcing people to find further ways to afford life’s essentials. Chelsea has also seen some evidence of people who are now dipping into their savings to pay for bills and unfortunately this looks set to continue.

“In tough times, it becomes even more important for people to manage their money effectively and adapt their savings habits. Reigning in unnecessary spending, considering each purchase carefully and adapting the amount you save each month can help save money to cover rising costs and still keep money aside for long-term plans.”