Things aren’t getting much easier for the British consumer. Low pay rises and high inflation mean that the average worker took home an average of £35 a month less in real terms in November 2011 than in 2010. Public-sector workers felt the pain even more: their take-home pay was down £49 a month in real terms compared with last year.
While the latest inflation numbers have come in slightly lower than has become normal – with the consumer price index (CPI) at 4.2% – prices are still rising at more than double the Bank of England’s target rate. Inflation also remains higher than deposit rates. So not only are most people’s incomes still falling in real terms, but so is the value of their savings (something to bear in mind when you hear the governor of the Bank of England crowing over falling inflation rates).
Still, a ray of sun has dawned on this parade of misery: in the last week, all of our big six energy suppliers have announced they will be cutting energy prices. Scottish Gas, the last to announce, is taking 5% off gas prices from 27 February; E.ON is cutting electricity prices by 6% and Scottish & Southern is taking 4.5% off its gas prices.
You might think these are big price cuts. But they actually go very little way to reverse last year’s rises. Take Scottish Gas. It might be taking 5% off gas prices, but it put them up 19% in August (also hiking electricity prices by 10%). So prices remain around 13% higher than last summer. According to uSwitch, the energy bills comparison website, the average annual bill is still around £125-£190 more than it was a year ago.
Not one of the main suppliers has cut both gas and electricity costs: instead, as Energyhelpline.com points out, they have tended to cut where they have the fewest customers. British Gas has 10.5 million customers for gas and five million for electricity, so, unsurprisingly, it has cut prices to the latter rather than the former. That’s despite the fact that the wholesale prices of both types of energy have fallen.
You’ll be wondering what you should do. In many cases the answer will be nothing – if you’ve used a comparison site recently, it is unlikely these cuts will have changed relative prices enough to make it worth doing so again. If you haven’t moved provider lately, you should check prices (start on www.moneysavingexpert.com) and consider doing so. According to The Daily Telegraph, EDF is the cheapest supplier in Britain.