Consumers hit as household bills rise at twice rate of inflation

CONSUMER finances are being squeezed by rocketing household bills, which have outstripped the rate of inflation by almost 100 per cent in the past ten years.

According to research by Santander, the cost of household bills has risen by 71 per cent, almost twice as fast as the 38 per cent increase in inflation as measured by the Retail Prices Index (RPI) over the same period.

One in ten questioned for the survey said that they would not be able to manage financially if their bills were to rise further over the next 12 months, while more than a third, 36 per cent, felt they would only be able to manage financially by making sacrifices elsewhere.

The figures come as home owners face further hardship as some banks and building societies announce a rise in their standard variable rate mortgages.

Santander’s analysis showed that utility costs were causing the greatest pain, with the price of gas almost trebling, up 181 per cent, in the past ten years; electricity has more than doubled to 109 per cent, while water bills have risen by 64 per cent, and council tax is up by 57 per cent in some areas.

By comparison, average salaries have risen from £16,964 in 2001 to £21,093 in 2011, according to latest figures from the ONS – an increase of just 24 per cent.

Carlos Palacios, banking director at Santander, said: “Times are tough for a lot of people at the moment and increasing household bills are one of the biggest causes of squeezed consumer finances.

“People have already been forced to make a number of adjustments to their lifestyle to cope with the hikes, and many will struggle to cope with further increases such as the water bill hikes recently announced.”