From running a car, to food bills and pet products, UK household expenditure is stacking up
Jon Daly has noticed it in the family’s fruit bowl, which isn’t as well-stocked as it used to be. His wife, Jess, has noticed it at the weekends, when the cost of filling the family’s car means thinking twice about long trips out. Inflation has hit the UK, and for households up and down the country rising living costs mean tough choices have to be made about spending.
The most recent figures from the Office for National Statistics (ONS) show that in October the cost of living was 4.2% higher than in the same month of 2020. As some countries emerge from lockdown, consumption has increased across the globe, driving up demand for goods and services – and their prices.
Beneath the headline rate of inflation – the highest in almost a decade – are some even steeper price rises for many daily essentials, such as energy. This week, Citizens Advice warned that one in 10 families were facing a financial crisis this winter, and for all but the wealthiest households there are shocks at the checkout or when bills land in the inbox or on the doormat.
Jon and Jess, both 35, live in Norwich, where he works for the insurance company Aviva and she works for the University of East Anglia. The couple have an eight-month old daughter, Robin, and a cat called Polly. The family is well-positioned to spot rising prices: they keep a spreadsheet of their expenditure and can track their household finances back to 2018.
But what they have noticed will be familiar to many – and underlines the stark choices facing households as they battle the biggest squeeze on incomes in years. In a deep dive into the finances of the Daly household, we illustrate how the cost-of-living crisis is eroding household finances for families across the country. “The main price rises we have seen are food and petrol,” Jess says. “The cost of petrol is just shocking at the moment.”
The Dalys say they are lucky enough to have choices about what they do with their money. With both in work, they know they are more fortunate than many families who are on the breadline this winter, forced to rely on food banks and unable to afford to heat their homes.
The squeeze on finances has led them to cut back on how much they put into savings, and to review subscriptions before they renew them, in case any spending can be reduced or cut entirely. But their income still covers their costs, and they do not having any outstanding debts to pay off.
Like many households, they tend to do a main food shop – every couple of weeks, and either in Morrisons or Asda – then top up with some items from a local corner shop and small supermarket, in their case Tesco.
With a young child and lockdowns to contend with, they have not been able to go out for restaurant meals this year, so their grocery budget accounts for pretty much all of their food spending. “We don’t eat out any more, so I do like to cook nice things,” Jess says. “I allocate a certain amount to food and we go over it every month at the moment. I look at the budget and where I can cut down costs so we don’t need to scrimp on food.”
The couple don’t eat most meat, which is one saving. But they have noticed rising costs in the things that they do buy. “Fish is expensive,” Jess says. “We really can’t afford to eat fish more than once a month at the moment. You buy a couple of pieces of salmon and it’s £7 or £8.”
Fruit, too, seems pricey, and Jon says he’s noticed that they don’t buy as much these days. A family shopping list they have shared with us shows how some things cost more this month than they did at the start of the year. A comparison of current prices with those they paid in late December shows peppers, cauliflower, potatoes all cost more now than they did then. These are all things that vary in price throughout the year but the ONS figures show an upwards trend in the cost of fresh fruit and vegetables since October 2020, with inflation in both categories running at 1.9%.
Dairy products have also gone up over the past year. Jon says his favourite yoghurt is now much more expensive, and this is part of a wider trend, of 9.7% inflation in this category. The cheese the Dalys had on their shopping list costs much more today than when they threw it in their virtual trolley in December, and have gone up by more than the headline rate of 3% recorded for “milk, cheese and eggs”. Lower shop prices for eggs may be disguising growth elsewhere, though – according to the ONS, last month a dozen large free-range eggs cost an average of £2.15, down from £2.26 the year before.
The Dalys are conscious of what they buy – trying to avoid food that has a lot of packaging or has been brought from thousands of miles away, and Jess says this is “quite hard when you are trying to save money”.
Although their daughter has started weaning, she still only eats a tiny amount, so has not added to the food bills. There is the cost of nappies to contend with now but the family say they have not been buying them for long enough to have noticed a rise in costs.
The fourth member of the family’s meals have been hit by inflation. “The food that our cat eats is never on offer any more,” Jess says. “I just paid £4 for a box of 12 pouches. But I feel like since having Robin I’ve neglected the cat, so the least I can do is get the food she likes.” The ONS says keeping a pet has become more costly: products for pets cost 2.9% more than in October last year, while vets’ bills have risen by 4%.
The other big cost increase the family has noted has been petrol. Recently, petrol prices in the UK hit a record high, and the average cost of a litre of unleaded has continued to climb, reaching 146.89p this week, according to government data. This is more than 34p a litre more than a year ago, and has made a real difference to many families’ budgets.
Neither Jon nor Jess use the car for work, so they do not have to rely on it every day. But they have started to think twice before using it in their spare time. “Last week, I filled up the car and it cost over £50, which was a bit of a shock,” Jess says. “The cost does come into my mind when we are deciding what to do – we won’t go for a trip out to north Norfolk and use a quarter of a tank of petrol, we’ll do something local instead. It’s definitely a factor when we’re planning what to do at the weekend.”
The energy crisis has put pressure on many families’ finances. So far the Dalys have not seen their unit costs rise as they are on a fixed-price tariff with British Gas but their monthly outlay has gone up, as having a young baby and working from home has meant using the heating more. “Before we had a baby, Jon would have probably said I was quite stingy with the heating,” Jess says. “But now it needs to be on more.”
Their direct debit increased by £20 a month to £100 in August, and they may have to pay more over the winter. Their fixed rate ends in April, and whatever they do, their costs look set to rise. They are paying about the same as the variable rate tariff, so a switch to that today would not have much impact but moving on to a new fixed-rate tariff with their provider would mean paying almost twice what they are charged now. Come April, they should move on to the variable deal but that’s at the same time the new price cap will come into force. Analysts have suggested the cap could be 30% higher than it is today, pushing average bills from £1,277 to £1,660 a year – a worrying increase for households around the UK.
Recently, the Dalys cut their cable TV and broadband bill, which they say had “crept up” to almost £70, by cancelling lots of channels, and they now pay £38 for a basic package. Before becoming parents they used to go to the cinema a couple of times a month but have lost track of the cost of that. When they do return they could get a shock: according to the ONS, cinema, theatre and concert tickets are 9.5% more expensive than they were a year ago.
While Christmas may be weighing on some people’s minds, the Dalys are planning a small celebration, and have a strategy to cover the costs: starting each January they both make a monthly contribution of £20 into a savings account. When the festive season arrives they have £480 to spend. “It really takes the sting out of it,” Jon says.