At 2.3%, inflation is nowhere near the 10% peak in the wake of Russia's full invasion of Ukraine, but it is creeping up and could hit 3% next year, say forecasters. Here are some of the pressures households are likely to face in the coming months.
Energy prices
Ofgem announced its latest price cap yesterday morning, with prices set to rise by 1.2% from January, to £1,738 a year for an average household. The forecaster Cornwall Insight reckons the cap is likely to come back down in April, by a modest 1.4% - but that will make little difference for households struggling this winter.
Mindful of the anger over the abolition of the winter fuel payment for most pensioners, ministers have persuaded the energy sector to set aside £500m for the next few months, to cushion the blow for some of the hardest-hit households - including by writing off debts for some. But Citizens Advice, which advises cash-strapped consumers, pointed out that total energy debt owed by households to their suppliers is now £3.7bn - and called for direct support from ministers. "Without government action, millions are at risk of being left in the cold this winter and beyond," said its head of energy policy, Alex Belsham-Harris. Even comfortably off consumers may well note that while utility bills are no longer rocketing, they remain a good 40% higher than the £1,200 a year or so seen before the Ukraine war.
And with geopolitical uncertainty high, as Donald Trump prepares to arrive in the White House, energy prices are not expected to return to the pre-war normal levels any time soon.
Housing costs
The cost of new fixed-rate mortgage deals has been creeping up in recent weeks, and the bigger-than-expected rise in inflation in October fuelled expectations that lenders will continue to raise rates.
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