As inflation rises uswitch.com asks: When will energy prices begin to fall?

Official inflation figures show that cash strapped British consumers are facing more financial gloom in 2007. However, according to uSwitch.com, the independent online switching and comparison site, the figures actually conceal the true impact of rising living costs on more vulnerable groups in society, such as pensioners.

Energy costs soared by over a third in 2006 (36%), which means that the average household is forking out over £1,000 a year for energy bills, yet a pensioner living on a basic state pension and pension credits alone will only have seen their pension rise by 4%.

Basic household bills such as energy, water, sewerage, home phone and council tax, have risen by £345 over the last year. The average annual spend on these essential bills is now £2623. In contrast, a pensioner could be living on as little as £5940 per year, so essential bills can now account for up to 44% of a pensioner’s annual income. These figures support the arguments made by Help the Aged over the difference between official inflation rates and a typical pensioner’s personal inflation rate.

Ann Robinson, Director of Consumer Policy, at uSwitch.com, says: “The figures make stark reading and put some context into what rising living costs really mean for those who are on a fixed or low income. Back in 2003 the maximum Winter Fuel Allowance available to pensioners aged between 60-79 was £200 and the average energy bill was £580, offsetting 34.5% of a customer's bill. Today, the Winter Fuel Allowance is still £200, but as at 1st January 2007 the average energy bill rose to £1,013 and the allowance will only represent 19.7% of a pensioner’s annual bill.

“It is unacceptable for pensioners to be paying up to 17% of their basic pension out on energy costs alone. We have a right to expect that with the basic cost of gas and electricity falling, companies will reduce their energy prices and offer some much needed respite for consumers. There is no reason to delay these price reductions and uSwitch will be watching to see whether prices fall across all tariffs. Whether it will be enough to ease the burden on pensioners and other vulnerable groups remains to be seen.“