Why everything is going up in price – and the one tip to beat the cost of living crisis

Sarah Coles of Hargreaves Lansdown, the investment firm, said: “Unfortunately, because houses all had to be valued at the same time, there may have been an element of corner-cutting, so some valuations weren’t terribly accurate. You can challenge your valuation. Challenges can be denied or can mean the valuation is raised instead of lowered – so do a bit of homework before you try it.”

National Insurance and other rising taxes

April also marks the arrival of a series of punishing tax changes.

The 1.25 percentage point rise in National Insurance will come into force on April 6, despite widespread calls for it to be scrapped in the face of spiralling living costs. The threshold at which workers start to pay National Insurance contributions will rise to £9,880 from £9,568 in April, before increasing again to £12,570 in July. 

The Chancellor has frozen income tax thresholds, which will drag more than one million people into the higher rate tax band by 2026. Maintaining the £12,300 capital gains tax allowance will see investors pay £65m more over the next five years, while a freeze in inheritance protections will cost families close to £1bn. 

Food

The cost of the weekly food shop is increasing, with nine in 10 people reporting a higher bill at the checkout, according to the Office for National Statistics.

Grocery prices inflation hit 5.2pc this month, rising to its highest level since April 2012, data from Kantar, a data consultancy, has shown. 

Supermarkets are switching their pricing strategies in response to the rising costs, moving away from selling goods at “round pound” prices. The percentage of packs sold at either £1, £2 or £3 has dropped significantly in recent weeks, it said. 

Clothing

A rapid rise in clothing prices was one of the biggest contributors to last month’s high rate of inflation across the country, official figures show. 

Clothing and footwear prices increased by 8.8pc in the year to February 2022, reaching its highest level since records began in 1988.

Hotels and dining out

Households can also expect to pay more when eating out once a tax break that pubs and restaurants enjoyed throughout the pandemic comes to an end. 

The VAT rate charged on food, accommodation and attractions was cut to 5pc in July 2020 before rising to 12.5pc in October last year. It will revert to the usual 20pc from April 1, meaning businesses, which are struggling with the same energy and fuel price rises as households, will have to pass on higher costs to customers.

However, eating out and hotel stays are among the few areas to not have jumped quite as high in cost over so far. Price changes in restaurants and hotels increased by just 0.04 percentage points over the year to February. But these figures may not tell the full story, as many hotels and restaurants were closed one year prior during lockdowns. 

Petrol and diesel

Petrol retailers have been accused of profiteering from the cost of living crisis by raising their profit margins, even when the wholesale price of oil has fallen.

Last week, Rishi Sunak was forced to slash fuel duty by 5p per litre, after the price of petrol rose 8pc, with diesel prices up by 12pc during the fortnight to March 16. Over that same period, the oil price dropped by 11pc.

Motorists stand to save an average of £3.30 off the cost of filling up their tank, following Rishi Sunak’s decision to cut fuel duty by 5p a litre, but motoring group the RAC has branded the reduction a “drop in the ocean”.

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