Research conducted by the Centre for Economic and Business Research has shown that despite earnings increasing by 3.6% (£23), the cost of living (including a tax rise of 6.5% and increasing food and fuel bills) increased by an even greater amount. This has resulted in the average family’s after-tax income (disposable income) falling by £8 since May 2007.
The fact that this is occurring makes it all the more essential that you budget effectively and minimise waste. There is nothing that we can do to stop food prices rising, but we can choose to plan our shopping so that – unlike the average UK family – we don’t waste one-third of all the food we buy. Look for the buy-one-get-one-free deals, but make sure that they are on items that don’t go off quickly. Look particularly for frozen food that is on offer. Try to avoid buying too much fruit or veg.
One way that you can budget is to use the Moneybasics Spendometer, a mobile phone tool that gives you the option of setting your own spending categories and limits. If this doesn’t ring your bell then you may be interested in using the Budget Calculator and keeping up-to-date on your computer.
Please read on for a summary of the top personal finance news stories for the week beginning 16th June 2008.
Inflation continues to rise – As has been a dominant story over the last few months, inflationary pressures are continuing to affect our economy. Food and fuel prices in particular have pushed the government’s preferred measure of inflation – Consumer Price Inflation (CPI) – up to 3.3%. It is the chief aim of Mervin King, Governor of the Bank of England, to keep inflation at 2% and within the range of 1% to 3%. With inflation at 3.3%, the target range has been breached. However, it is unlikely that inflation will fall back within the target range in the short to medium term with oil prices likely to be held up as demand continues to exceed supply.
One way to cope better with the pressure inflation is exerting on the budget is to pay off your credit card bills. The Annual Percentage Rate (APR) payable on credit cards on average has been rising over the last twelve months. Do you know how much you pay? Use the Credit Card Calculator to see just how expensive leaving unpaid balances on your credit card is.
EU considering changes to bank account laws –A draft proposal from European Union Internal Market Commissioner Charlie McCreevy has suggested reforms to EU legislation that will make it easier and more hassle-free to switch bank accounts.
With over 50% of the laws affecting the UK being passed in Europe it is important, when possible, to keep abreast of developments in European legislation.
On the topic of bank accounts, we should be more willing to switch them if another bank or building society is offering a best product or service. Find out more about banking with Moneybasics: Banking
Record growth in retail sales – According to the Office for National Statistics (ONS) retail sales rose by 3.5% during May. This is the strongest monthly growth in sales since January 1986.
This was largely down to wonderful sunny weather and heavy discounting from retailers with clothing sales jumping by 9.2% as many sought out more suitable summer attire.
Prepared for Moneybasics by Jason Taylor, Advocacy Officer (Credit Action).