Gas and electricity fuel prices rises at triple rate of inflation

10th November 2017 | Residential Energy

Gas and electricity companies have been the biggest culprits for raising prices over the past 20 years, according to an analysis published just a day after utility SSE and Npower revealed plans for a mega-merger – prompting fears of yet more price rises.

The research found that the cost of utilities has risen a triple the rate of inflation over the past two decades.

The average rise in prices for a basket of goods between 1997 and 2016 was 50.7%, but utility bills went up by 139% – far outstripping the average 78% rise in weekly household income, which has gone up from £316 to £562 over the period.


Alcohol and tobacco was the only category that went up more, but this was largely down to government-mandated tax increases on items such as cigarettes.

Housing costs have also accelerated faster than incomes, rising 98% over the period, while holidays and eating out have also become relatively more expensive than in 1997. Households have been saved by sharp falls in some categories, especially shoes and clothing, where prices have plummeted as Chinese factories have pumped out low-costs goods.

The research, by financial planners Tilney, used a mix of ONS and Family Spending Survey data.

It also found that higher income households – as they spend more on housing, eating out and holidays – have had a higher effective inflation rate than lower income groups.

Andy Cowan, head of financial planning at Tilney, says, “In the case of the top 10% of UK households – those with an income in excess of £78,500 a year – our research found that they have endured considerably higher overall inflation than the headline figures, while also being exposed to a much greater income tax burden than the wider population.”

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