How to fight back against the cost of living crunch

Prices are rising all around us but we are not powerless – there are dozens of ways to limit the damage. By Rachel Mortimer and Jessica Beard

Families face losing £4,600 a year to the worst cost of living crisis in a generation as a raft of price and tax rises takes effect this month. Households have already been squeezed by inflation on everyday items, but costly jumps in energy bills, council tax and National Insurance contributions are about to compound their problems.

The crunch could cost the average middle-England family £ 385 more each month, according to Telegraph Money analysis of official data.

The average monthly energy bill for a five-bedroom house will increase by almost £80, while mortgage payments will rise by £72.

Wealthier households with a breadwinner who earns £100,000 a year can expect to pay £ 92 more in monthly National Insurance contributions, while school fees and the cost of food and clothing also rise.

Pensioners, who will be spared the controversial changes to National Insurance, still face being thousands of pounds worse off each year.

The average wealthy retired couple will spend £187 more each month thanks to the cost of living crisis, equal to £ 2,244 a year, according to Telegraph Money’s analysis.

The additional spending will be driven by soaring energy costs and price rises at the fuel pumps. A couple who drive 4,400 miles a year, the average for non- commuters, can expect to spend an additional £288 a year on petrol. Younger, single people are not immune: they are forecast to face a £1,800-a-year rise in costs and they tend to have less in savings to fall back on.

Desperate households had hoped that the Chancellor, Rishi Sunak, might signal a reversal of planned tax rises in last week’s Spring Statement but were left disappointed. The Government is pushing ahead with its 1.25 percentage point increase to National Insurance next week, while the average council tax bill is expected to rise to almost £2,000, up from £1,898.

The Chancellor also offered little in the way of support for households grappling with crippling energy costs. The cap on energy bills rose by a recordbreaking £693 this week, meaning the average household will pay £1,971 a year for gas and electricity.

The Government has promised to “take the sting” out of rising gas and electricity costs by offering loans of up to £200 to millions of households, but the money must be paid back over the next five years.

The crisis is expected to amount to the greatest fall in living standards on record as wages fail to keep pace with rampant inflation.

The next few months may seem bleak in the face of so many price rises, but there are ways to ease the financial squeeze. Telegraph Money asked a group of experts how they are acting to beat the cost of living crunch – and what readers can do too. can understand why people wanted to rush to the safety of such a bank in the pandemic, even if rates were effectively zero.

The easy access market has been given a shot in the arm by Chase Bank, which has launched a rate of 1.5pc for those with Chase current accounts. If, like me, you’d prefer to stick with your existing current account, the good news is that Chase’s move has also encouraged the most competitive rates without restrictions up to 1pc, so I can move my emergency savings somewhere more rewarding.

Fixed rates have also been creeping up. Al Rayan Bank offers the best oneyear deal at 1.86pc and the best over two years at 2.11pc. This is still a long way below inflation, however, so your money will be losing spending power unless you invest it Think about how cash you need. Once you have three to six months’ of essential expenses in a competitive easy-access account for emergencies (one to three years’ worth in retirement), consider investing the rest of your money.