Rocketing household bills

Posted by Ian Carpenter in Credit Crunch on 24 May 2013 - Ian is Operations Director at checkmyfile

If you are feeling the financial squeeze more than you did a few years ago, there is a very good reason – household bills have risen by over 40% in the last five years.

Before the recession hit in 2008, the average yearly household bill totalled £5,834 according to the Bacs Family Finance Tracker. This figure has risen significantly during the economic crisis, reaching £8,202 in 2012. On top of these necessary bills, ‘lifestyle services’, including mobile phone bills, personal loans and gym memberships, rose at a slower rate from £3,830 to £4,156, but helped to increase the total average yearly bills from £9,665 to £12,358 over the same period.

The research, based on the spending habits of over 3,000 adults, also reveals that 25% of people regularly feel financially overcommitted compared to 17% in 2007, reflecting that a significant proportion of the UK population has been affected by the economic downturn.

Mike Hutchinson, of Bacs – the company behind Direct Debits - says, “Our latest research clearly shows that hard-pressed family budgets are being strained more than ever. The household purse is increasingly being squeezed and a big bill could tip the family budget over the edge, but splitting that cost across the year could relieve some of the strain and with the discounts offered from many billers and service providers for paying by direct debit, there’s an opportunity to save some vital pounds.”

Some temporary relief may be forthcoming as a result of the drop in inflation reported yesterday, but many economists expect the rate of inflation to increase again, from to 2.4% to over 3% during the summer months, as a result of increasing energy bills.

There have been some positive signs in recent months that the wider economy is starting to recover, but it’s clear that the personal finances of millions of Britons may take a little longer to restore.

Ian Carpenter is Operations Director at checkmyfile, has a degree in Business Studies, and is a Graduate Member of the Institute of Credit Management. He can be contacted at ian.carpenter@checkmyfile.com

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