Price rises on the cards as energy bills soar
High energy costs aren’t only having a direct impact on consumers’ pockets. Manufacturers could start increasing the prices of goods to pass on their higher energy costs to consumers.
Consumers in England, Wales, and Scotland are protected by the energy price cap, which sets the maximum price suppliers can charge customers. The government increased the energy price cap at the start of October. The rise will see around 15 million households paying 12% more for their energy - households on standard tariffs saw their energy price go up by £139. For prepayment meter customers, the average energy bill will now cost £153 more.
Industry specialists and researchers have warned the increase might not be the last, saying the price cap could rise by hundreds of pounds in the coming year. Some suggest the energy price cap could increase to around £1,660 by next summer. This would be 30% higher than the £1,277 cap set for winter 2021-2022.
The price cap is designed to help consumers, and the current cap will be welcome news for many households, at least for now. However, businesses might end up absorbing the increase in global energy prices. This could be bad news for the consumers, as it might increase the prices of other consumer goods. So while you might pay a fixed sum for your energy, the cost of goods from food to clothing and other products could soar this winter.
Fuel crisis continues in some parts of the country
Some parts of the country are still struggling with low fuel stocks. Government figures show the average fuel stock across the UK is at 25%, down from 33% before the crisis began last month. The stock figures refer to the amount of fuel petrol stations report to having by the end of the day.
Stock levels are returning to normal in the north east of England and in Scotland. However, if you want to fill up your tank in London and the east and south of England, you might be out of luck. The south east of England has the lowest current stock levels at just 16%.
The shortages have caused some level of distress in the care industry. Older people and those requiring care have had issues with carers struggling to make it to appointments on time or at all. The situation is slowly getting better across the country, but local differences may continue in the coming weeks.
Electric car sales increase
The fuel crisis has impacted car sales as well. Although September tends to be the second-busiest month for car sales, numbers were down this year, dropping by a third even from last year, when Covid-19 restrictions had a significant impact. The car industry has yet to start on the road to recovery, unlike many other sectors.
However, there was some good news for the electric car industry, with over 30,000 pure electric cars registered last month - a 50% increase from last year. A further bump could happen as the full impact of the fuel crisis becomes apparent. Hybrid cars are also selling well.
Industry specialists are pleading with the government to support the switch to electric cars. Mike Hawes, chief executive of the SMMT, has asked the government to start investing more in electric car upkeep. Hawes wants to see more charging points in the public infrastructure to ensure everyone can be part of the electric car revolution.
While demand for electric cars is on the increase, the industry is facing some problems. For example, the global shortage of semiconductors is affecting car manufacturers. As a result, there have been some production delays, and the registration figures could have been higher without these.
House prices climbing up at the fastest rate since 2007
According to mortgage lender Halifax, the average house price increased by around £4,400 between August and September. The increase is the fastest since the housing boom in 2007, with UK homes now priced at an average of £267,587.
Trends in the housing market continue to show signs of Covid-19’s impact. People are still looking for bigger spaces to adjust to the need to work from home. Average flat prices only increased by around 6% over the last year, whereas semi-detached houses increased by almost 9% during the same period. The differences in the sub-categories in residential markets are important to keep in mind. For example, city centre flats are still proving a little hard to sell. People prefer to buy homes further afield, focusing on bigger properties and spaces with gardens.
There are a few factors that could explain the rise in house prices. The end of the stamp duty holiday could be a factor, with people rushing to sell in recent months to attract buyers. However, experts say other factors are behind the increase in activity, including low mortgage prices and a limited supply of properties.
Tenants are also hunting for rural properties
Those with an extra room or a second property to rent might also benefit from the shift towards rural rental properties. Rental asking prices in rural areas have gone up by 11%. The increase is impressive when you consider prices increased only by 2% in urban locations.
There is a lot more competition for a rental property in the suburbs. Currently, only 3% of rental properties listed on Rightmove are in rural locations. Tenants are offering above-market prices to secure the property they really like. While the property market for rentals has cooled slightly after the summer, this is largely down to lack of property and not demand. Properties in rural areas currently find a tenant 18 days quicker than before the pandemic.
Fixed-rate mortgage deals to look out for
Homeowners who aren’t looking to sell should consider shopping around for mortgages. Rates on mortgages are currently close to record lows, and you could end up saving money on your mortgage payments.
Mortgage rates are especially good at the moment for those who own a larger share of their home and who had a longer-term fixed mortgage. You could end up saving hundreds of pounds. However, you should compare prices fast, as if the Bank of England decides to raise the base rate could mean an end to competitive mortgage deals.
Council tax in England could rise by £220 a year
The Institute for Fiscal Studies (IFS) has warned about increasing council tax rates for England. Its latest research suggests council tax could rise by as much as £2,200 per year within three years.
Councils are facing severe funding pressures due to the pandemic. The government has agreed to provide councils with £12bn since the start of the pandemic. But under the current spending plan, council tax bills would have to increase by at least 3.6% to keep services running at pre-pandemic levels.
Researchers at the IFS also said the government plan for social care reform won’t be fully paid by a rise in National Insurance contributions. The government has said it will introduce an £86,000 spending cap on care.
Councils currently fund local services with council tax, government funding and business taxes. Central government grants have been slapped, and the extra funding promised after Covid-19 is unlikely to be sufficient. Many local businesses are also suffering, with nearly a million businesses predicted to go under in the UK.
Kate Ogden, a research economist at the IFS, said the local government funding system is “hopelessly out of date”. If the government wants to prevent councils from cutting back on services, it will have to review the system and provide more funding to councils.
The state pension is set to rise - but is it all going in your pocket?
Pensioners could be looking to make gains in the next few years. The government’s current system would increase the new state pension to around £20,000 a year by 2050. The state pension could increase by 3.9% next year, giving pensioners around £9,703.20 per year. According to The Express, if you include compound interest every year until 2050, you’d receive £19,856.70 by 2050.
The state pension is currently £179.60 per week. The full amount you receive depends on your National Insurance contributions.
The government reviews pensions each year using the triple lock system but is temporarily suspending it as UK wage growth figures were artificially inflated due to Covid-19. For next year, the government will use either the rate of CPI inflation or 2.5%, which is what the figures in the Express refer to. CPI inflation figures are hovering at around 3%, which means pensions will likely increase by more than the 2.5% rate.
However, an increasing state pension might not mean more money in your pocket, as rising living costs could eat away much of your pension. Electricity and gas bills are rising, and your council tax bill could also increase in the coming years. It is essential to understand what you could get if you are closing in on your retirement. This allows you to budget and plan your finances.
Insurers return Covid cover for cancelled trips
Insurance companies Direct Line and Churchill have resumed cancellation cover for cancelled holidays due to Covid-19. Insurers added the cover to their travel insurance policies last year, providing travellers more support as the pandemic spread.
Many insurers removed the Covid-19 cover earlier this year. However, Direct Line and Churchill now include cancellation cover with their travel insurance plans. The policy gives travellers the option to cancel their trip or continue to travel to places where the Foreign Office has changed advice to against ’all but essential travel’ after the initial booking.
Tom Bishop, head of travel insurance at Direct Line and Churchill, said the approach “aims to support the recovery of the travel industry” and will “give customers greater confidence to travel if they wish to”.
So far, other insurers have not followed the change in terms and conditions. However, more insurers will likely restart Covid-19 cancellation cover as the travel sector continues to recover.
Holiday bookings surged when the government sampled foreign travel rules in England in September. Fully vaccinated people no longer need a pre-departure test before returning from non-red listed countries.