07 August 2017 – Household bills have risen at over double the rate of inflation over the past year, according to new research by comparethemarket.com. Its new Billflation Index analyses the monthly cost of housing, energy, motor insurance, home insurance, petrol and utilities. The key finding from this first index reveals that the average monthly cost of household bills rose by 5.7% to £845 in April 2017 compared to April 2016.
The 5.7% year on year increase in household bills compares to a 2.6% annualised rise in inflation, as recorded in April 2017. The primary driver of this rise in household bills is the increased costs of mortgage and rental payments. The average monthly housing payment, which includes mortgage repayments, private and social housing rent, rose by £23 over the past year. The rise in housing costs across all tenures can broadly be attributed to the continued house price growth forcing people to take larger mortgages meaning the monthly repayments are larger. However, with interest rates at record lows, the cost of servicing a mortgage is also extremely low presenting an opportunity for mortgage holders on a standard variable rate to reduce their payments.
The increased cost of energy also significantly drove up bills over the past year, with the average monthly energy bill having risen by almost 6% to £94.
The Insurance Premium Tax (IPT) hikes also drove up the cost of motor insurance by 8.2%, to an average of £61 per month. There are a number of reasons for this significant increase from IPT to increasing whiplash claims and changes to the way in which personal injury compensation payments are calculated. Drivers have also faced further cost pressures, with the price of petrol also rising dramatically by 10% to £100 per month.