Credit, Collections & Insolvency News
The latest UK Consumer Prices Index (CPI) figures, published by the Office for National Statistics (ONS) show that CPI rose by 10.5 percent in the twelve months to December 2023, down from 10.7 percent in November.
The drop was due to fuel prices falling along with clothing and footwear prices, however, this was offset by rising costs in restaurants and hotels. The cost of food also continued to rise and there was a big jump in air fares.
Commenting on the inflation figures for December Jane Tully, Director of external affairs and partnerships at the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said “The relentless pressure on household budgets has continued into the New Year and shows little sign of easing. Many households will face tough decisions in the coming months – and with further energy price and council tax rises on the horizon, the situation is set to get harder.”
“For those already struggling, it is vital that they receive the support they need to get them through the winter – including protections from being pushed further into difficulty by unaffordable debt repayments.”
“I would encourage anyone worried about their finances to contact a free, independent debt advice service like National Debtline. Our advisers will be able to take you through your options and what next steps you may be able to take.”
Sarah Coles, Senior Personal Finance Analyst, Hargreaves Lansdown said “It may be downhill all the way from here, but it’s going to be such a slow decline that we can’t take our foot off the gas. Inflation eased off very slightly in December, as the threat of a global slowdown kept the price of oil lower, pushing down the price of fuel at the pumps. However, eye-watering energy price rises, food costs, air fares and hotels kept prices higher, and it seems that high inflation is going to stick around for a while. It means the pressure on our pockets is going to get worse.”
“In most cases, prices won’t fall, they’ll just rise marginally less alarmingly in the coming months. The HL Savings & Resilience Barometer found that wages had fallen 4% in real terms last year, and forecast that they weren’t going to make up any of the ground in 2023. It means that the ongoing battle to make ends meet will rage on. Sticky inflation means the market is still expecting more interest rate rises in the near future, from 3.5% to around 4.5%. We could see a rise of 0.5 points when the MPC meets in February. However, as times get tougher further down the line, they’re expected to make cuts. It means that fixed rates for both mortgages and savings may well have peaked.”
“Petrol prices eased back again in December, to 155.3p for petrol and 179.1p for diesel, as the threat of global recession meant less demand for oil. It still costs a fortune to fill up at the pumps, but it’s getting less painful, with petrol up just 6.5% in a year and diesel up 19.8% – back to the kinds of prices we saw in February last year. We’re a long way from last July when petrol was up an incredible 42.9% in a year. However, more recently crude oil prices have started to creep up again, so this may not be the end of horrible price rises.”
“Food and non-alcoholic drink also bulked up inflation again – up 16.8% in a year. There were more painful rises in some of the key essentials, including, milk, cheese and eggs. Farms are under enormous price pressures as everything from animal feed to running farm machinery weighs heavily on their finances. The process of getting from the farm to the supermarket is also energy-intensive from pasteurisation to bottling, and it all adds up. The nightmare of higher food prices is that they hurt people on lower incomes more than anyone else- because they spend a larger proportion of their income on the essentials. It means a 16.8% rise has left millions of people struggling to feed their families.”
“The Energy Price Guarantee has been protecting us since October, and we still have the lump sum payments to see us through the winter, but prices are still much higher, with electricity prices up 65.4% in a year and gas up 128.9%. We also face the prospect of losing that government support, and seeing the price guarantee rise another £500 in April, so life is going to get tougher before it gets easier. It’s no wonder that the ONS found more than half of us are worried about keeping warm at home this winter, and that around half of us are finding our energy bills difficult to afford at the moment.”
Simon Webb, Managing Director of Capital Markets and Finance at LiveMore, said “There has been some respite recently with a fall in fuel and oil prices which has fed into the latest small, but welcome drop in inflation.”
“The rise in food prices of 16.8% is worrying and so is the fact that although wholesale gas and electricity prices are down, unfortunately householders will not be benefiting as energy suppliers buy energy in advance. Even if they do pass on any fall in price in a few months’ time, in April the government’s energy price guarantee goes up from £2,500 to £3,000, meaning our energy bills will still be sky high. If inflation continues to fall it will be slowly.”
Ten price rises at the supermarket (source Hargreaves Lansdown)
