New research by Compare the Market shows that household bills, including energy, water, home insurance, motor insurance, and council tax, have surged by an average of £326 in the past year, amounting to a 6% increase. This rise is significantly influenced by the increased cost of car and home insurance premiums.
The average cost of car insurance now stands at £951, a 51% increase (£322) from the previous year. Home insurance has risen by 30%, now costing an average of £197, up by £46. These increases in insurance premiums are partly due to the higher cost of claims for insurers. Additionally, water bills and council tax have also seen year-on-year increases, adding to the household budget pressures.
The total annual cost for regular household bills is now approximately £5,589, up from £5,263 last year. A decrease in energy bills, with the latest Ofgem price cap set at £1,928 per year from 01 January 2024, has partially offset these increases. This is £172 less than last year’s cost under the £2,500 Energy Price Guarantee with the £400 Energy Bill Support Scheme discount.
Households could potentially allocate up to 16% of their average weekly earnings to cover these increased bills. Data from Compare the Market’s Money Action Index indicates that households with children have often resorted to borrowing to manage regular expenses, with 76% struggling to repay their monthly credit card bills in the past six months.
With the rapid rise in bills, households are advised to look for savings where possible. Switching car and home insurance through Compare the Market could save up to £692, including up to £516 on car insurance and £176 on home insurance. A third of customers might also save £186 by switching their broadband provider through Compare the Market.
For households facing debt or difficulty in paying regular bills, early intervention is crucial. Contacting creditors or suppliers can lead to negotiated payment holidays or agreements for paying off arrears in smaller monthly amounts. Free debt advice services are also available across the UK to assist in these situations.
Hélène Barnes, Cost of living expert at Compare the Market, said: “Many households will likely be concerned to see increases to their bills over the past year. During this difficult time, it’s important people take as much action as they can by looking for available savings on offer before they purchase a product.
“For example, you could save a significant amount of money by shopping around for cheaper deals on certain bills, such as car and home insurance, broadband, and credit cards. Comparing prices online is one of the best ways to check you’re getting the right price for you.”
