The cost of living in the UK is at its highest level in almost a decade, adding to pressure on households as the Government ramps up taxes on workers and cuts universal credit.
Annual inflation surged to 3.2% in the 12 months to August, with experts believing it could hit 4% by January and Business Secretary Kwasi Kwarteng admitting it could be “a very difficult winter”.
Financial blogger Pete Chatfield, of the Household Money Saving blog says: “Inflation is a good thing if it stays under the Government’s target of 2% but anything over that and it becomes a bad thing.
“With the gas crisis and lorry driver crisis, inflation looks set to rise until after the winter at least. How long it will last depends on what the Government does – and I haven’t seen much action yet.”
10 ways to inflation-proof your life from coming squeeze…
1. Be heating smart
With gas prices rocketing, you can help keep your bills in check by the way you heat your house.
If you have a gas, oil or LPG central heating system, set the system timer so the hot water comes on only when required.
Alternatively, if you use an electrical immersion heater and have an Economy 7 or 10 tariff where energy is cheaper at night, heat your water during the night.
Try not to use electric heaters – they are the most expensive forms of heating. Rather than just using the thermostat to set your home’s temperature, use radiator valves to turn the heating down in rooms you do not use as often.
2. Shop own-brand
Food prices are likely to go up, industry experts and Government ministers have warned.
Swapping branded products for supermarket own-brand equivalents is an easy way to slash the price of your bill – from cornflakes and pasta to oven chips and washing-up liquid.
Researchers say that by downshifting to own-brand or value products shoppers can save around a third on weekly food spending. Look out for vouchers, too.
Pete Chatfield says: “You can also earn money through your shopping with apps such as Shoppix and Storewards, where you upload photos of your receipts in exchange for points which you can convert to cash or vouchers.”
3. Protect your pension
Inflation can be bad for retirement planning, as your savings must keep rising to pay for the same quality of life.
The best way to protect your pension against inflation may be to buy an index-linked annuity.
You will get a lower income initially but this will rise in line with inflation for your lifetime.
“Unfortunately for those already drawing a pension there’s nothing you can do,” says Pete. “For those still saving, talk to a pension adviser to see how you can best protect your income in the future.”
4. Switch and stop
Never renew your car or home insurance automatically – new customers get a better deal in year one, and the amount you save will help as other costs rise.
Now is also a good time to reconsider any subscriptions, such as Spotify, Netflix or Sky channels, which many signed up to over the pandemic as they were spending more time at home.
Research by TopCashback found people are spending £105 a year on average on subscriptions they do not use.
5. Know your tenant rights
Those with mortgages should not have a rate increase but inflation could mean some landlords may try to put up rents.
If you are on a fixed-term tenancy – one that runs for a set period – a landlord can only increase the rent if the tenant agrees to it.
If they do not agree, the rent can only be increased once the fixed term ends.
If your tenancy is periodic, or rolling on a weekly or monthly basis, a landlord cannot normally increase rent more than once a year without agreement from the tenant.
6. Water meters
If you do not have a water meter, your bills are estimated, so you pay a fixed amount depending on your home’s size.
Only half of homes have a meter, despite potentially saving some households hundreds of pounds.
If there are more bedrooms in your house than people, or the same number, ask your provider about installing a meter.
They are free, except in Scotland, and can be fitted inside or outside your home.
7. Take a holiday
No, not jetting off to the beach. If you are feeling the squeeze, you could take a payment holiday from a mortgage or pension.
Depending on your circumstances and previous payment history, you might be able to take a break for up to six months, while workers can arrange to paused their pension contributions.
But Pete warns: “Consider it carefully because some mortgage companies are less willing to remortgage if you’ve taken payment holidays.”
8. Get what you are entitled to
You might be eligible for other payouts or discounts depending on your circumstances.
If you are on a low income or receiving benefits, you might be entitled to the warm home discount, which gets you £140 off your bills during winter.
There is also the cold weather payment of £25 to people on certain benefits when the temperature drops below zero for seven days.
You can get 25% off your council tax bill if you are the only adult in your home, and you can get 15-30 hours of free childcare a year if you have young children.
9. Save a rainy day fund
If at all possible, it is a good idea to save money. Even regular, small amounts build up.
For those with smartphones, two apps, Chip and Plum, help those wanting to save by connecting to your bank account and rounding up card purchases to help you save without affecting your usual day-to-day spending.
10. Avoid wasting energy
The inflation squeeze means it is more important than ever to keep costs down, and little ways to save can make a surprising difference.
Unplug your chargers when not in use, as many continue to use energy when left in a socket.
You can also save money by switching off devices such was games consoles, laptops and TVs, which draw power when plugged in even when not in use.
The Energy Saving Trust estimates that a typical household wastes around £35 a year by leaving devices on standby.
Pete adds: “Tumble dryers consume a lot of energy, so save your washing up for dry days, when you can put it out on the washing line.”