The energy price cap has risen today, meaning the average household not on a fixed tariff will be paying 54 per cent – or £693 a year – more for their gas and electricity.
It means the annual cost of energy for the typical home on a default tariff will be £1,971. For those on a pre-payment meter, it will tick over £2,000.
New fixed deals are now even more expensive in many cases, as they are not protected by the cap.
Cost of living crunch: The increase in the energy price cap will lead to more pressure on the budgets of many households. Other costs that are increasing include fuel and food
Rising energy bills are just one element of the growing cost of living crisis, whereby the cost of everyday essentials such as filling up a car with petrol to doing a supermarket shop is increasing.
This is Money looks at the impact the increasing cost of living is having on different areas of people’s lives, from where they are choosing to live to how much money they are able to save.
1. A quarter are saving NO money each month
Unsurprisingly, having to spend more on daily essentials such as food and fuel means there is less money left over to save.
Two thirds say the rising cost of living has impacted their ability to save money, while 30 per cent said they were not saving anything on a monthly basis.
More than a quarter of people are not saving at the moment, according to Accenture
Younger people were even less likely to save, according to the research from professional services firm Accenture, with 43 per cent putting away money for a rainy day.
Laura O’Sullivan, UKI banking strategy and consulting lead for Accenture, said: ‘The energy price cap rise is a seminal moment in this cost of living crisis that is a big concern for many UK households.
‘It’s no secret that people are struggling at the moment and need all the help they can get to cope with spiralling living costs.’
She called for banks to provide more support to people struggling with the cost of living, saying: ‘As much as possible, banks should focus on offering practical advice and products that can help people through this challenging time.’
Cutting costs: Older people have always downsized, but Purplebricks research suggests that reducing energy bills is now the biggest motivation for doing so
2. House hunters prefer smaller, greener homes
With cheap energy deals having vanished from the market and switching all but pointless, the only way to cut energy bills for most people is to try and reduce the amount they use.
Early signs suggest this could be altering people’s preferences when it comes to buying or renting a new home.
The online estate agent Purplebricks says that more than a quarter of 45 to 54 year olds, and 29 per cent of those aged 55 and over, are looking to downsize to a smaller home.
In the past people may have downsized to reduce household chores or access equity tied up in their home, but today 60 per cent say that the reason they want to do so is to cut their energy bills.
And even some younger house hunters are downsizing, with 10 per cent of those under 24 looking for a smaller home.
Concerns over rising energy rates are so acute that 10 per cent of those considering moving are doing so specifically because their current home isn’t energy efficient enough.
Having an energy efficient home, which usually means a more modern property with good insulation, now trumps other property priorities.
In Purplebricks’ survey, 80 per cent of people said that having an energy efficient home was important – more than a large garden (74 per cent), utility room (65 per cent) or office space (57 per cent).
Decline in demand: Checkatrade said demand for boiler services had fallen amid rising energy costs, suggesting that homeowners could be turning them off earlier
3. Gas safety checks being swerved
While we have had some good weather in recent weeks, parts of the country have also seen snow – so many might like to keep the radiators on for now.
But more than a third of homeowners will – or already have – switched off their heating earlier than usual this year to save on bills, according to a survey by the Gas Safe Register.
More worryingly, it suggested that almost a third of homeowners would skip the recommended annual gas safety check this year to save money.
According to Checkatrade, the average cost of a safety check is £80.
Experts recommend homeowners get gas appliances such as boilers, cookers and fires serviced once a year to help prevent gas leaks and stop carbon monoxide being released.
Mike Fairman, boss of Checkatrade, said: ‘As energy prices soar, we’ve noticed changes in homeowner demand for heating and energy efficiency measures.
‘March is usually a busy month for boiler engineers, however so far this month we’ve seen a 28 per cent decline in demand for repairs.
‘This could suggest that people are switching their boilers off early, as they seek to save money on heating bills.’
4. People could revert to coal fires and even burn clothes
Rising costs mean more people are struggling to pay their energy bills, or not turning their heating on or using appliances when they need to.
An academic has warned that rising costs could increase fuel poverty to levels currently experienced in Central and Eastern Europe, where up to 40 per cent of the population are affected.
An academic has suggested more people could return to more traditional fuel sources such as fires, as the cost of living soars
Dr Ralitsa Hiteva, senior research fellow in the Science Policy Research Unit at the University of Sussex Business School, said: ‘In the next two years we will see many households with people in full employment who are fuel poor and will be in energy debt.
‘This is a type of fuel poverty which is currently experienced in Central and Eastern Europe.
‘We can also expect to experience significant reductions in air quality, particularly in cities, which will be caused by people reverting to the use of lower quality fuels and more traditional type of fuel sources.
‘In this respect we might also become more like Eastern Europe, and see practices of burning old clothes and plastics in adjusted log burners and stoves even in apartment buildings.’
Cancelled plans: Mutual OneFamily has said 67% of under-40s may postpone or abandon plans to get married or have a family because of the rising cost of living
5. Life milestones being missed
There are also suggestions that younger people could put off milestones such as getting married, owning a home and starting a family due to the wider cost of living crisis.
The cost of owning a home, getting married and having a family has now reached £360,000, according to the savings and insurance mutual OneFamily – the equivalent of almost 11 years’ full-time salary for the average worker.
It said more than two thirds of under 40s were likely to cancel or postpone at least one of these milestones, and that the current cost of living crisis, paired with the after-effects of the pandemic on the UK’s economy, could impact this even further.
Costs have increased so much that a typical adult aged 40 or under will now spend 145 per cent more on buying a home, getting married and having a family than someone aged 55 or over, who spent an average of just £147,000 when following the same life journey.
Paul Bridgewater, head of investment at OneFamily, said: ‘We have noticed a shift in priorities when it comes to the under 40s, who will have undoubtedly felt the impact of the increase in the cost of living along with rising house prices, following the pandemic uncertainty of recent years.’
No-show: Some 13 per cent of people say rising living costs mean they can no longer afford to attend family events such as weddings, or buy gifts
6. Family events being shunned
Finally, research suggests that stretched households are declining invitations to family events such as weddings, christenings and birthday parties because more of their income is going on essentials such as energy bills and food.
More than a quarter of adults surveyed by Forbes Advisor, the price comparison and financial information platform, said they would have to cut back on gift giving or spend less on attending significant life events due to the rising cost of energy, fuel and food.
Meanwhile, one in eight said rising living costs meant they could no longer afford to buy gifts or attend celebrations altogether.
According to the research, the typical amount people spend on attending a family wedding is £235, while a baby shower sets them back £165 and a housewarming party £138. This includes travel, accommodation and money spent on buying a gift.
Laura Howard, personal finance expert at Forbes Advisor, said: ‘The end of Covid-related restrictions on international travel, guest numbers at events such as weddings, self-isolation and mask wearing, is a massive breath of fresh air as we head towards a brighter spring and summer of 2022.
‘Yet, as we come out of one crisis, the weight bears down heavier on another – the soaring cost of living.
‘We have little choice but to power our homes, fill up our cars with fuel, and do the weekly food shop – all costs which have soared since the pandemic began.
‘But for more and more households, this is simply where the money runs out and ‘extras’ such as life celebrations become unaffordable.’
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