Brits face paying more than £300 more for spiralling energy bills next year with poorer families set to be hit hardest, according to new research.
The outlook is gloomy with the Bank of England warning of inflation rising to a decade high of around 4 per cent coupled with rising tax levels by the government.
The Centre for Economics and Business Research (CEBR) figures show consumers being put under financial pressure over the next 12 months.
It is likely to see households having to pay £315 more a year or 2.5 per cent off the average disposable income for a family, the research consultancy said.
The figures are worked out with the regulator Ofgem setting out a 12 per cent rise in the energy cap next month for 15 million standard variable customers, along with a probable 14 per cent rise next April.
It will be the poorest who are hit the hardest the figures show as they are likely to pay £258 more a year which equates to 16 per cent of disposable income while the richest 20 per cent of the country will fork out more than £368 which is only 1 per cent of their disposable income, The Sunday Telegraph reports.
The CEBR has stated that poorer households tend to be on variable rather than fixed rate tariffs and so they will be affected more with price rises, it is reported.
Taxes have been raised as well by the government for businesses and households as it looks to make £36 billion to spend on the NHS and social care.
Sam Miley, an economist at CEBR, told the Telegraph: “It is clear that the rise in energy prices is set to impact the poorest households disproportionately, given that essential spending – such as utilities and food – makes up a greater proportion of their income.
“Combining this price growth with some expected downward pressure on incomes – reflecting the upcoming termination of the furlough scheme, the reversal of the universal credit uplift and the hike to national insurance further adds to the pressure that the worst-off are set to face.”
George Buckley, chief European economist of the financial services group Nomura said the energy crisis would affect the UK’s ability to recovery next year despite savings of £20 billion during 2020 for households in lockdown.
He said the problem is that to a large extent the people that were able to save money during the pandemic will not be those who are now going to be affected by the spike in energy bills.
Financial markets are now betting on interest rate rises from the Bank of England and there is a threat of “stagflation” with slow growth and high inflation that hit the country memorably in the 1970s.