The Financial Blog

It was quite interesting to read that Aldi, Lidl and Netto supermarket sales have increased to their best ever levels in recent weeks as UK consumers seem to be searching for the best deals on everything from food to fuel and finances.

Figures also show that people are starting to turn away from what I would describe as the ‘top-end’ grocery shops, so places like Marks and Spencer, Sainsbury’s and possibly even Tesco these days! - all these supermarkets saw a downturn in market share for the last 12 weeks.

Perhaps this is the latest sign that people are willing to make cut backs even on their food budgets. I know that shopping for a family of 4’s weekly food has increased considerably over the last 6 to 8 months;

I’ve swapped the family’s weekly shop to Asda from Sainsbury’s. Without sitting down and writing out a full price by price comparison I can’t say for definate if it has made a difference. At a ‘guesstimate’ I’d say we’re saving upto £20 each time we do a big food shop. Most of the time maybe we save £10 - but when you shop sometimes twice a week you could end up saving £60 to £100 a month, which is all good news at the moment!

Centrica, the company who owns British Gas is going to increase gas prices by 35 per cent and electricity prices by 9 per cent.

These latest price rises are being blamed on the rise in wholesale gas and electricity prices seen over the last 9 months.

British Gas managing director Phil Bentley said: “We very much regret that we have had to make this decision at a time when many household budgets are already under pressure.

“The simple fact though, is that we have entered an era of unprecedented high world energy prices. The only answer to cope with higher energy prices, I’m afraid, is for all of us to be more energy efficient.”

It surely won’t be long before we see the rest of the energy industry following suit…

There have been enough warnings in the media and it looks like EDF Energy are one of the first companies to hit customers with another price increase, by 22 per cent on gas and 17 per cent on electricity.

Moneyexpert.com Director Sean Gardner says: “Given that EDF are already at the foot of the table in terms of price, these increases are going to be a further kick in the teeth for their 7.9 million customers. Putting gas bills up by 22% and electricity by 17% is a huge increase, pretty much equivalent to double the increases they’d already implemented in January.

“Our research earlier in the year showed that nearly 1.4 million people missed a payment on energy bills and that figure is only likely to rise with moves such as this.

“Admittedly it looks like the hike won’t just be suffered by EDF customers. When Centrica chief executive Jake Ulrich advises wearing two jumpers instead of one only the wildly optimistic would see anything but further price rises on the horizon.”

“That said, though, EDF customers really should take these rises as a wake up call and start looking around for a better deal. It’s certainly out there.”

Get comparing gas and electricity providers today, don’t waste any more time! >>Click here to compare energy pricesand switch energy providers now

Defaqto the independant financial data collection and research company has completed another report on home insurance. This time Defaqto has looked at comparison web sites, or aggregator sites, to see if and how they benefit consumers.

Defaqto reported on 28 aggregator web sites including Moneysupermarket.com, GoCompare.com, Tescocompare.com, Comparethemarket and Confused.com

The key findings were;

• no aggregator site offers customers ‘whole of market’ coverage, despite what the aggregators imply from their marketing
• few aggregator sites allow customers to clearly compare policies on anything other than price
• aggregators make a number of assumptions about underwriting factors in order to obtain quotations from insurers and intermediaries which could leave customers uninsured if they do not check their quotation very carefully
• some aggregator sites do not provide consumers with the ability to cover all of their insurance needs

Defaqto’s General Insurance Consultant, Mike Powell says: “The home insurance aggregation market is no where near as developed as the car insurance market. For the consumer, it appears that there are a number of sites available, but our research into this market has left us with the opinion that there are only 5 true aggregator sites. The remainder predominately provide quotations from intermediary panels, which could easily be obtained from a local broker”.

“Some of the so called aggregator sites do not allow the consumer to include cover for their possessions outside of the home” adds Powell, “This is a major area that consumers may need cover, and not being provided with the option to include this cover could be seen as an example of poor practice by the FSA”.

Powell continues, “Consumers who choose to use these price comparison sites should be careful to check exactly what they are being covered for and in particular, they should pay close attention to the excess levels”.

Inflation has hit an 11 year high of 3.3 per cent, well above the bank of Englands target of 2 per cent.

All the recent reports I’ve read seem to be pointing towards further price increases and a real threat of recession in 2009.

The problem for family finances is that living costs have increased over the last 12 months while salaries are ‘expected’ to increase by just half as much. The other problem here is why would a business give pay rises to staff in the current economic climate?? I just can’t see it happening…

Unfortunately for consumers, that leaves us trying to fund the shortfall in rising food bills, fuel prices and utility bills. I’m just glad I’m not remortgaging in the next 3 years otherwise I’d be faced with possible mortgage exit fees and mortgage booking fees to pay in order to get onto a competitive mortgage rate - that’s if I could find one.

You should think very carefully about clearing any debts you may have and then tackle your household budget to ensure you’re not overspending and cut back wherever you can. I think these are the main essentials that everyone should undertake and most people should be able to get by until things ease.

Unfortunately the main form of defence against high inflation is high interest rates, so it won’t suprise me if we see higher interest rates to come.

In the meantime get using the internet for what it’s best at - comparing and buying! And I don’t mean clothes and gadgets! I mean comparing financial products and comparing home insurance, comparing car insurance to find the best deals and get the cheapest rates you can. This is the best way to combat increasing inflation and it’s something you can do fairly easily using the internet.

>>Click here to compare car insurance

>>Click here to compare home insurance and find the best deals

>>Click here to compare mortgages, find the best remortgage deals today

Following up from all the latest energy price debate British Gas has cut the cost of it’s Click Energy 5 tariff. This is a duel fuel tariff that’s available online and these seem to be the best way to save money on energy bills.

Much like the mortgage market if you want to go for long term certainty then you could opt for a fixed price fuel deal, where the energy company fixed the cost of your energy supply for a specific period of time.

Scott Byrom from Moneysupermarket.com commented: “As predicted, British Gas has retaliated and kicked Npower off the top spot by £16 following the latter’s move to cut prices on its SOL 11 tariff only yesterday.”

“Having shaved 2.4 per cent off its gas prices, Click Energy 5 is now the cheapest tariff on the market at £845 a year (see table below). However, it may not be long before npower hits back with a further cut. Of the two heavyweights, npower may have to settle for second place as British Gas seeks to maintain its position as the UK’s UK’s cheapest energy provider.”

“Despite this battle in the online dual fuel market, customers should be aware that in the short-term, while online deals offer the greatest savings, they will not provide any shelter from future price hikes. For those who want long-term security on their energy bills, fixed deals should be considered.”

>>>>Click here to compare energy prices online and find the best fixed energy price deals…

Scott Byrom, Utilities Manager at Moneysupermarket.com offered his comments on the Government’s fuel poverty action programme;

“With only 0.11 per cent of the UK’s energy giants turnover spent on social tariffs and helping those in the poorest households, it is high time more is done to help the most vulnerable customers.”

“We welcome any extra help offered to tackle this issue but do these measures go far enough to help the majority of those who face fuel poverty? With the cost of gas and electricity on the rise, action needs to be taken now to prevent the number of people in fuel poverty escalating.”

“At present, social tariffs, aimed at the four million British households in fuel poverty, wildly vary between the energy providers and don’t always seem to offer the best value with better deals found online. This needs to be addressed first and foremost to ensure immediate help is given to those who need it most.”

“Vulnerable customers struggling to pay their energy bills need to be proactive and contact their energy supplier to see what options are available with regards to reducing their energy bills. Likewise, energy suppliers need to ensure adequate support is readily available and help is delivered efficiently.”

>>Click here to compare energy suppliers and find the best deal for your needs

A moneysupermarket.com survey reveals that over 66 per cent of Brits say they won’t be able to cope if fuel prices keep rising.

Surely it’s time for the government to step in and stop ignoring the unbelievable price rises we’ve seen over the last 12 months?

The Government is already making an additional £110 million from fuel duty this bank holiday Monday - http://www.thefinancialblog.co.uk/petrol-price-increases-will-cost-110-million-extra-this-bank-holiday/

With the price of oil hitting record levels, petrol prices exceeding £1.10 per litre and gas and electricity prices up by 15 per cent, a Moneysupermarket.com poll shows two thirds of Brits fear they won’t be able to cope if fuel prices continue to rise.

• 66.9 per cent of people who took part in the pole agreed with the statement ‘very concerned – If fuel/energy prices continue to rise I won’t be able to cope.’
• 29.2 per cent of people agreed with the statement ‘Concerned – I’m a little worried that I may not cope if prices rise.’
• 3.4 per cent of people agreed with the statement ‘Unconcerned – I’d rather prices didn’t rise but I’ll be comfortable regardless.’
• 0.6 per cent of people agreed with the statement ‘I don’t care – Fuel/energy prices don’t concern me at all.’

Head of debt at moneysupermarket.com, Tim Moss, said: “Brits are being stretched to breaking point as our poll of moneysupermarket.com users shows.”

“Rising fuel prices are a massive issue right now, in much the same way as they were during the fuel protests of eight years ago. Leading economists have been telling the Government it can afford to drop the price of petrol by nine pence per litre without having any effect on its bottom line. People are really starting to suffer and need help urgently.”

“We are powerless to control the amount of tax the Government reaps from petrol, so people who are struggling need to focus on the things they can control. People should start by gathering their paperwork and working out the true scale of their problems. From there they must prioritise bills and pay the essentials such as mortgages or rent and utility bills first. Non-essential items such as magazine subscriptions and pay-TV might have to be sacrificed.”

“If you feel unable to sort out your money worries yourself, start by getting some free independent advice from organisations such as the Citizens Advice Bureau or the Consumer Credit Counselling Service.”

Make sure you are getting the most out of your personal finances Compare savings accounts and get the best rates, transfer any credit card balances to a 0 per cent credit card asap and if you need a loan then compare loan rates to get the cheapest deals.

But if you’re struggling to keep up with repayments on a loan or credit card then you should seek professional financial advice, applying for additional credit is not the way to solve financial difficulties.

Consumer watchdog Which? Say that now is the best time to swtich your home energy supplier as the last of the big 6 suppliers, Scottish and Southern Energy have increased their prices; see the blog from last week; http://www.thefinancialblog.co.uk/further-energy-price-increases

Siobhan Parker at Switch with Which? says: “This latest price increase is the green light to switch - everyone’s feeling the post-budget pinch and making sure you’re getting the best deal for your home energy is a smart and easy way to take some of the pressure off.

“If you haven’t compared your rate with the competition lately, now is the time.  We can help you compare prices, switch for free and save money.”

You can get hold of 500 Tesco Clubcard points if you buy your car insurance through tescocompare.com

This offer is available until 8th April 2008 and all you need to do is enter your Tesco Clubcard number with your other details when buying a policy online.

You can collect Tesco Clubcard points when you buy a car insurance policy from any car insurance provider quoted through the Tescocompare.com search results.

The 500 Tesco Clubcard points will show on your statement by August 2008, if not earlier.

If you are not a Tesco Clubcard holder and you purchase a car insurance policy from Tescocompare.com you can go in store and complete the regisration form. You need to return it via Freepost and get registered within 30 days then your 500 Tesco Clubcard points will be automatically credited to your account.

If you need further information on the Tesco Clubcard points and membership visit tesco.com or call the Clubcard helpline on 0800 59 16 88

Remember you get also earn Tesco Clubcard points if you pay in-store with a Tesco Clubcard Credit Card. 16.9 % Typical APR, variable.