The cost of living crisis has led to a significant increase in annual household bills, soaring by over £1,300 this year and 80% over the past two years, according to recent research conducted by CompareThe Market.
Comparing the year to November, households spent an average of £3,280 on energy, car, and home insurance, compared to £1,964 in 2021. These bills were a staggering 80%, or £1,461, higher than in 2020 when the average cost stood at £1,819.
The primary reason for the sharp increase in household costs is primarily attributed to the ongoing energy crisis. Despite the government’s “energy price guarantee,” the average household’s annual energy bill is expected to be around £2,500, representing a 95% increase compared to last year’s energy price cap set by Ofgem.
Furthermore, starting in April next year, changes to the energy guarantee will result in a further 20% increase in costs, with a typical household projected to pay around £3,000 annually. CompareThe Market also anticipates rising costs across other areas such as broadband, TV, and phone bills, aligning with inflation.
According to CompareThe Market’s research, car insurance costs have also intensified, with an increase of £76 compared to last year, rising from £553 to £669, marking a 14% surge. Similarly, home insurance premiums have experienced a rise due to the impact of inflation on the value of household contents. The escalating labour and material costs have contributed to higher expenses for building repairs. The average cost of home insurance rose by 13% compared to 2020, from £134 annually to £151.
Highlighting the impending challenges, Hélène Barnes, from CompareTheMarket, emphasized that many households should prepare for a “big payment shock” in 2023, with further price increases projected. She advised households to review their regular bills in order to identify potential savings opportunities before the price hikes take effect.
Barnes also recommended shopping around for better deals on car and home insurance and exploring options to save more on broadband and credit cards, as their research indicated significant potential savings for most households.
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