Consumers set for long hot summer as inflation rises

Following the Bank of England's letter to the Chancellor announcing that the Consumer Price Index (CPI) has risen to 3.3% - well above its 2% target - independent price comparison and switching service, uSwitch.com, warns consumers to keep their cool this summer.

Ann Robinson, Director of Consumer Policy at uSwitch.com comments: "While today's figure of 3.3% is higher than the analysts expected, consumers, who have seen bills such as food rise by as much as 20% over the last 12 months, will be hardly surprised by the news.

"This is further evidence that life is getting tougher. Unprecedented hikes in the cost of food, energy and fuel, topped with relentless tax rises, are forming an increasingly large hole in people's pockets. Essential living costs have risen by an average of 7% from June 2007 to June 2008, but with salaries expected to increase by just 3.4% this year, households are witnessing a substantial deficit. We are working harder than ever before but we are not getting any richer.

"With inflation misery set to continue this summer, this is a difficult time for consumers who are concerned about their jobs, their homes and their ongoing ability to manage their debts. It's time to take a long hard look at their household budgets to see where they can cut costs. Those trying to get a mortgage or remortgage will find the good deals out there are few and far between, with higher arrangement and exit fees. The Bank of England has kept interest rates at 5% this month, but there is every chance that they could increase again to keep inflation in check."

Robinson concludes: "What matters is that people think carefully about all the options and ensure that they can meet the financial commitments that they take on. There are positive signs that consumers are already cutting back, curtailing spending and trying to clear outstanding debt. With a careful eye and a steady hand on the household budget, most should be able to weather the storm. There are ways to ease the financial pain and beat the price rises. Households could save an average of £1,500 on bills and financial services through a simple makeover."