Families are spending ever more money on heating their home but less on eating compared with six years ago.
Overall households are spending £489 a week after inflation, dropping from £526 in 2006, according to the Office for National Statistics.
But the soaring cost of energy, combined with an increase in the number of people renting, means the cost of housing fuel and power has increased. Spending in this area is now 14% of overall budgets, up from 11% in 2006 and overtaking transport as the largest outgoing.
In spite of rising prices, the amount we spend on food has fallen from £62 to £56, suggesting households could be choosing ‘heating over eating’ or simply becoming savvier with the way they shop. The lowest income households still spend the highest proportion of their overall budget on food.
The biggest drop in family spending was on transport. Even in the face of rising petrol prices and rail fares, the amount we have spend has gradually reduced since 2001, reflecting a conscious effort to reduce journeys and an uptake in fuel efficient cars.
This year each of the ‘Big Six’ energy companies announced bills hikes for customers that would take effect in time for winter. Despite revealing bumper profits, the firms sought to deflect the blame of rising bills on green taxes levied by the Government.
In the Autumn Statement, George Osborne revealed that the cost of these commitments would be shouldered by the Government to reduce household bills by an average £50 a year.
However, only two of the biggest six providers, British Gas and SSE, have promised to pass on the saving to all customers. The rest are applying the saving to select tariffs – meaning some of their customers will in effect lose out.
Critics have said the energy giants are still getting away with ‘green murder’.
“Indications are that not everyone will win in the war on the cost of energy and some will essentially lose out because they were savvy and switched to pay less in the first place,” commented Clare Francis, editor of comparison site MoneySupermarket.
“For the many customers who signed up to a fixed tariff prior to the recent price rises to safeguard their household from the threat of rising prices, the green levy will have been built into the costs, and should now be reduced accordingly.”
The site advises customers on fixed rate deals to stay on their existing tariff as it’s still likely to be cheapest option, but if you are on a deal without any exit penalties, compare prices once all of the changes take effect, as there may be further savings to be made.