INFLATION FELL to its lowest in more than four years in February, new data showed this week, but many are still failing to see any signs of economic recovery in their back pocket.
Prices have been rising faster than pay almost continually since the start of the financial crisis in early 2008.
But after February’s fall in consumer price inflation to 1.7 per cent, its lowest since October 2009, and a recent small pick-up in wage growth, the gap between the two is at its narrowest since April 2010, the Office for National Statistics said.
Jafar Hassan, personal finance expert at uSwitch.com, said that while the inflation figures may look impressive, they are a stark contrast to the challenges facing those still struggling to make ends meet.
“Despite the Government’s optimism, an overwhelming number of us are yet to see any signs of economic recovery in our back pocket.”
Mr Hassan said that household bills – especially rent, childcare and energy - have continued to soar, while the average pay rise across the UK is expected to be just one per cent this year.
February’s drop in inflation was largely driven by the biggest drop in fuel prices since September 2009.
But Mr Hassan said: “The challenge facing households to meet rising bills and living costs is by no means over. It’s our hope that the improving economy is reflected in people’s pay rises this year.
“In the meantime, consumers need to help themselves, by making sure that they are not paying over the odds on essential household bills.”
Mr Hassan said there are a number of ways households can save money, such as shopping around to see what the market has to offer.
He said: “There is currently £253 between the cheapest and the most expensive energy tariff on the market so consumers have a lot to gain from shopping around and ensuring they’re on the cheapest available deal for their needs.”
Mr Hassan said consumers should look outside of the ‘Big Six’ energy providers and considering moving to a smaller supplier as they currently offer the most competitive tariffs.
Consumers should also think about paying their bills by direct debit, rather than by cash or cheque as suppliers charge these customers more, he said.
Consumers can also earn discounts on their bill by moving to ‘dual fuel’ - getting both gas and electricity from the same supplier - and by managing their account online.
“The average household energy bill is now an eye-watering £1,265 a year – 168 per cent more than the £472 it was a decade ago in 2004 so for those consumers who are worried about their household budget, they should consider a fixed price tariff as this will protect them against future price hikes.”
Consumers should also try and become more energy efficient to save money, Mr Hassan suggested.
“They should start by sealing off draughts in their windows and doors, using energy saving light bulbs and installing loft and cavity wall insulation. They should also try to commit to simple actions like not keeping appliances on standby and switching off lights in rooms that they’re not using.”
For those who use credit cards, it is important to choose the right card to match spending needs and not get caught out by high interest rates, he said.
Mr Hassan added: “It is also worth considering cards which offer zero per cent on purchases as these can give you some breathing space by giving you the time to save the cash to clear the balance while avoiding interest charges. If you are looking for new ways to manage your debt, then take a look at the zero per cent balance transfer cards.”
Those who are looking to save should consider current accounts, some of which offer better rates than easy-access ISAs, said Mr Hassan.