Prices are skyrocketing and millions of people are beginning to feel the effects.
The new energy price cap has been announced, but there’s more to come as we head into fall. Here are some of the key dates and events in the coming weeks that will almost certainly mean more belt-tightening.
Back to school
Parents face the usual task of getting uniforms in time for the new school year. In 2020, the average cost of a uniform for secondary schools was £337 and £315 for primary schools, according to charity The Children’s Society.
This year, due to rising prices, around a quarter of parents expect to spend more than usual, while another quarter will try to reuse old school items rather than buy new ones, according to a Barclaycard study.
Meanwhile, one in five plan to donate their children’s old uniforms to others who cannot afford to buy new ones. Demand for free school uniforms has exploded recently, according to a charity.
Parents in Scotland have already had to absorb these costs.
New law to protect parents in England from unnecessary school uniform costs will come into force in September. It’s meant to keep families from having to shell out too many branded items. However, schools that need to find a new supplier have until September 2023 to introduce these changes.
September 5 – New Prime Minister to be confirmed
Former Chancellor Rishi Sunak and Foreign Secretary Liz Truss are currently battling to lead the Conservative Party and become the country’s new prime minister.
Mr Sunak pledged more money to help with energy bills depending on the scale of the price rises, while Ms Truss pledged to immediately reverse the National Insurance hike.
Sep 15 – Next interest rate decision
The Bank of England raised interest rates to 1.75% in August and they are expected to rise further, possibly as high as 2.25%.
To give an idea of what that could mean, a quarter point increase on a standard £250,000 variable rate mortgage, paid off over 25 years, could mean paying an extra £30 a month, says Andrew Montlake, of Coreco Mortgage Brokers.
And people with fixed rate mortgages also face problems. “We’re starting to see ‘payment shock,'” Montlake says, referring to the nasty surprise people get when their fixed term expires and they’re faced with higher rates.
He adds that it may take some time to fully feel the impact of these rate hikes. “Over the next few months and early next year when you’re faced with an increase in mortgage payments as well as an increase in energy payments, that’s when people might start to worry. discuss.”
Of course, any interest rate hike would be good news for savers, although banks don’t always pass the entire rate hike on to their savings accounts. For example, after the last increase of half a percentage point, Santander only applied this increase to its ISA purchase aid – the rates on its other savings accounts have only increased by a quarter of a percentage point.
Cost of living payments
Despite all these cost increases, for some households, there is help on the way.
People on disability benefits will receive a one-time payment of £150 from September 20.
More than eight million low-income households on means-tested benefits will also receive £324 – the second installment of a cost-of-living payment – this autumn. The first payment of £326 was made in July.
Recipients of tax credits have had to wait longer, with the first payment mostly being made between September 2 and 7, and the second during the winter.
October 1 – New energy price cap comes into effect
The price cap announced at the end of August will come into effect in October, bringing a typical bill to £3,549 a year. That’s two and a half times what people paid on average in October 2021.
The cap is the maximum amount suppliers can charge customers in England, Scotland and Wales for each unit of energy, and is intended to protect customers from short-term price spikes. But because electricity and gas prices are going up right now, the cap is also going up.
It will be a “boost for households across the UK”, says Peter Smith of National Energy Action. “It’s simply unaffordable and will push many more people into fuel poverty – it means misery, cold houses, debt and dangerous coping tactics.”
However, the first installment of the government’s £400 energy rebate will start to arrive around now. A reduction of £66 or £67 will be applied to household energy bills every month until March 2023. How you get it depends on how you pay your bill – see our table here for more details.
19 October – Inflation figures linked to state pension and other benefits
This is a key date for retirees. The Office for National Statistics will release the inflation figure for September and it is this figure that will be used to set the state pension hike which will take place in April 2023.
After having been suspended for a year due to the pressures of the pandemic on public finances, the so-called “triple lockdown” will be reinstated. This ensures that the state pension will always increase each year in line with inflation, the average wage increase or 2.5%, whichever is greater.
With inflation currently at 10.1% and set to rise further, this would mean pensions will see double-digit increases.
While this is good news for retirees, critics have called the move “ridiculous”.
Other benefits are also tied to the September inflation rate, including Universal Credit, Disability Assistance and Jobseeker’s Allowance.
There would usually be a budget in late October or early November, in which tax hikes or cuts, government spending plans, and other measures affecting people’s finances would be announced.
But that may depend on whether the new prime minister calls for an emergency budget sooner. Ms Truss said she would, Mr Sunak did not confirm whether he would.
November 3 – Upcoming interest rate decision and monetary policy report
Another interest rate hike may well be in the offing, so it will be of interest to hear what the Bank of England has to say about inflation and economic growth. After the publication of its last Monetary Policy Report in August, central bank expects inflation to hit 13% by year end, predicts long recession. Since then, other forecasters have claimed that inflation could reach 18% next year.
November 24 – Next price cap announcement
Originally, the energy price cap changed every six months, but Ofgem has now said it will change every three months so that price rises and falls are passed on to customers more quickly. Industry analysts Cornwall Insights predict the price cap will rise again – this time to £5,386.
Nov/Dec – £300 pensioner cost of living payment
Households who receive the Winter Fuel Payment – which is worth between £200 and £300 and is paid to almost every household with at least one person of retirement age – will receive a one-time additional £300 in November or december. This should cover almost all pensioners in the UK.
December – Christmas expenses
Christmas Eve is usually the biggest shopping day of the year, with the exception of Black Friday, the last Friday in November. However, given the rise in energy prices in October, people will start saving for gifts much earlier than usual, predicts Barclaycard.
December 15 – Next interest rate decision
A new rise in rates could occur at the end of the year. The Bank of England will assess the impact of its previous actions, but most forecasters expect interest rates to hit 3% next year, with some saying they could hit 4%.
Mid-December – Increase in rail fares announced
The government announced earlier this month that regulated train fares in England will fall below the rate of inflation next year, although he has not confirmed what the exact figure will be. The increase will come into effect in March 2023.
January 1 – The next energy price cap comes into effect
The next price cap, announced in the fall, will come into effect.
“Households are going to be hit again in early January – at the height of the heating season and just after Christmas, an already costly time,” says Peter Smith of National Energy Action.
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