Soaring bills could hit Brits with annual retail inflation of almost 7%

Headline grabbing rises in gas and electric bills, supermarket shopping, petrol and rent could push Mr and Mrs Average's annual retail inflation for goods and services to almost 7% warns Chelsea Building Society.

Misery for millions

Household energy costs, food bills, petrol prices and rental payments account for 33% of all individual expenditure. However, all of these areas are being clobbered by agonising rises, creating crippling costs for millions of consumers as they continue to take the brunt of the economic turmoil.

Leading energy giants have recently reported rises of up to 35% for gas and 22% for electricity. These rises, plus the potential for rental payments to rise by 9% and the continued misery experienced by motorists and shoppers at the petrol pumps and supermarket checkouts (rises of 34% and 12% respectively), could in turn double the annual retail inflation for all goods and services felt by hundreds of thousands of Britons.

If all other goods and services items, aside from these price busting areas, maintain the same rate of inflation these hikes alone could push the annual retail inflation figure for already struggling consumers to almost 7% and force them to dig even deeper to ride out the credit crunch.

However, these recent rises will hit pensioners even harder. With food and energy costs accounting for over 35% of their total expenditure on goods and services (compared to just 21% for non-pensioners), recent hikes in food, gas and electricity bills will bring their annual retail inflation closer to 8%.

Darren Stevens, Director of Customer Services at Chelsea Building Society, commented; "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."