Top money stories 14 - 18 May 2007

Top Tip:

New data out this week indicates that the high street is losing ground to online retail. Internet shopping allows consumers to compare prices and products from the comfort of their own home, making it much easier to shop around for the cheapest deal. Many retailers also offer their best prices online. So get clicking!

Tuesday May 14th:

Inflation topples from 3.1% Peak

The headline rate of inflation has fallen to 2.8%, thanks to cheaper gas and electricity bills.

Inflation measures the rise in the cost of living, and is closely monitored by the Bank of England for signs that the economy is overheating. Last month inflation jumped to 3.1%, way above its 2% target, encouraging the bank to increase interest rates to cool the economy down. The recent fall indicates that inflationary pressures have eased, but fears of high food prices mean that it is likely interest rates will rise again to 5.75% later in the year, further increasing the cost of borrowing.

Wednesday May 16th:

Courtroom Drama: Victory for the banks

A judge has ruled in favour of penalty charges. Over recent months thousands of consumers have written to their banks asking for re-payment of these charges on the grounds they represent a penalty for breach of contract (which is illegal), rather than part of the price of the bank’s services. Although many of those seeking repayment had threatened to sue, so far none of these cases had made it in front of a judge.

Until Wednesday that is, when a judge in Birmingham decided that charges of £1,982.37 in penalty fees and interest were legal and ruled in favour of Lloyds TSB. This judgment is not binding (as it only came from County Court) so another court would be free to reach a different conclusion. However, the fact that the law has been interpreted in this way at least once certainly strengthens the banks negotiating position, making it more likely that they will choose to defend these claims in court.

Pensioners Fail to Claim £2bn in Tax Credits

Up to 1.6 million pensioners fail to claim tax credits to which they are entitled, according to the Public Accounts Committee of the House of Commons.

Pension credits aim to ensure that the all Britain’s elderly can maintain a decent standard of living, by allowing those over 60 on low incomes to claim extra money each week. Although more pensioners are claiming tax credits than in previous years, many elderly people, particularly the very poor, the very old and those from ethnic minorities, simply do not realize they are entitled to extra money and fail to claim the credits.

If you are over 60, living in the UK and either single with a weekly income of less than £119.05, or married or in a civil partnership with a joint weekly income of less than £181.70 you are entitled to claim more money from the Government. Moreover if your children are still at school they could be entitled to free school meals.  Click here for more details.

Thursday May 18th:

Online Sales Hit £1 Billion

British consumers have now spent over £1 billion online since internet shopping was first launched 12 years ago, according to data released today by industry specialists IMRG. The milestone was reached thanks to an exceptionally strong April, with online sales up 55% on last year.