We break down the figures and reveal how much extra you might soon have to pay
Thursday 21 Oct 2021 Author: Laura Suter

The news headlines state price rises and a difficult winter ahead. Gas prices have risen significantly, pushing up energy bills, while supply chain issues are said to be pushing up prices at supermarkets. But how much does the average family spend each month and which areas are going to see rises soon?

On average, a household in the UK spends £587.90 a week – or £2,528 a month. Clearly there will be big differences in this figure, depending on the income of the family and living costs in their area of the UK, but for the purposes of this article we’ll stick to averages.


Housing costs

The biggest bill for most households will be keeping a roof over their head. The median cost of rent in England was £730 a month, based on April 2020 to March 2021, which is the highest ever recorded. Clearly this varies massively across regions, with London at £1,430 and the north-east at £500.

The tax regime for landlords has become increasingly tougher, and many have passed those costs on to renters. At the same time, some have used recent house price rises as a catalyst to sell up, so there is less supply.

The cost of mortgages is harder to gauge. Mortgage interest rates are at all-time lows and the cost of borrowing is incredibly cheap. However, this has gone hand in hand with price rises in the housing market, pushing up the cost of most properties. It’s expected that interest rates will rise in the next year, meaning the cost of borrowing will rise too.

Verdict: Rising


Food shopping

The average household spends £274 a month on food and drink, and another £56 on alcohol and cigarettes. This total cost makes up a larger proportion of spending in poor families than wealthier ones.

We’re already seeing food price inflation: in July food prices rose by the largest amount since August 2008. We’re hearing lots of businesses report supply issues, and there has been increased costs for HGV drivers, which may be passed on to consumers. Also, energy prices and petrol prices are going up, which all must go somewhere.

Verdict: Rising


Energy bills

The average cost for a family on a standard tariff was around £108 a month for gas and electricity, before the recent price rise. It would have been lower if you’ve got a fixed-rate deal, but higher if you have a large household and your usage is higher. Those on pre-payment meters will pay more too.

Everyone knows energy prices are rising; the energy price cap has already meant prices have risen £140 a year and when the next energy price cap comes in (April 2022), it will rise again. Some have put that increase at £400. Anyone who is currently on a fixed-rate deal that’s expiring soon will see a big price rise.

Verdict: Rising (unless you’ve already fixed for a long time)


Water

Water UK estimates that the average household pays £33 a month, but it depends how much you use and whether you have a meter                                      or not.

Prices dropped marginally this year and are unlikely to rise significantly in the coming months. Also, you can easily reduce your usage and bills if you’re on a meter.

Verdict: Not rising


Council tax

The average band D council tax bill in England is £1,898 a year, or £158 a month. This has risen by an average of £7 a month this year already, and more rises are expected. Councils are having to deal with the cost of the pandemic and now the additional cost of the social care plans announced by the Government last month.

The IFS has predicted a potential increase of around £240 to average council tax bills in the next few years if more central Government funding isn’t given to local authorities, and even its best-case scenarios see an extra £160 added to bills in the next few years.

Verdict: Rising


Transport costs:

The average person spends £66.31 a month on their commute, whether by road or rail, according to Lloyds Bank. This rises to £76.50 for Londoners.

For motorists, the oil price is rising and so petrol prices are going up (even aside from recent crisis). There is also the potential for a tax rise as fuel duty has been frozen for the past 11 years, which the Government may end in the Budget later this month.

For those commuting by train, there is a near-4% increase in rail fares from January for season ticket holders and some other ticket types. Train companies lost a lot of money in the pandemic so will be trying to make some money back.

Verdict: Rising


Childcare

For families, one of the biggest costs is childcare – higher than mortgage or rent costs for some. The average cost for 25 hours of childcare for under 2s is about £600 a month, where a full-time space for an under-2 in nursery is just over £1,100 a month, figures from Coram Family and Childcare’s annual survey show.

Again, this varies dramatically according to the region you live in, rising to almost £1,400 for a full-time place for a child under two in inner London.

Parents are paying 4% more for childcare for children under two, and 5% more for children aged two and over than they were a year ago, according to data from March.

The Covid crisis hit many nurseries as they had to temporarily shut. Some have now closed permanently, reducing supply in the market, which usually pushes up prices. What’s more, childcare costs have risen steadily in recent years and there’s no sign of that stopping.

Verdict: Rising

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