Transcription
Coming up on the Sky News Daily with me, Jonathan Samuels. I don't know about you, but it seems to me life just keeps getting more expensive. I thought the peak of the cost of living crisis was behind us. Outgoings, though, keep going up.
On this edition of the Sky News Daily, we're looking at how we can ease the pressure. So, in just a few days, the kids are going back to school, and that means buying books, uniforms, pack lunches, and all the rest of it. And before we know it, our fingers will be hovering over the thermostat, and our thoughts will be turning to the festive celebrations. But at what cost?
Both food and energy prices are on the rise again. Remember back in October 2022 when inflation hit its highest level in 40 years, a whopping 11.1%. It seemed then things could only get better and on paper it has. Today's inflation is at 3.8%. But that means prices are still going up, just not by as much as they were. So why does everything keep getting more expensive? And when will this inflationary hangover ever end?
In a moment, we'll speak to Jess Sharp from the Sky News money blog. She's got some brilliant money-saving tips, so stick around for that. First of all, Paul Kelso is our business correspondent. Paul, great to have you on the podcast. There have been dribbs and drabs of news from the past couple of weeks that all seem to be pointing towards one trend that things are getting more expensive. First of all, tell us how do we work out the cost of things like food inflation. Where where do the figures come from?
The main collection of these numbers is done by the Office for National Statistics, which uses various methods to compile inflation figures because it looks across the board, uh, at all kinds of indicators of what's happening to prices. When it comes to food inflation, for example, they monitor baskets of goods. They look at the cost of stuff. They have measures to ensure that they're comparing prices across across the board. And they then compare those numbers month and year on year. The main numbers that we rely on when we talk about, uh, on the whole, when we talk about, um, headline inflation rate and then the various elements that make it up: food, fuel, whatever it might be, housing, uh, is we look at year-on-year numbers.
Well, well, let's talk a bit more about food then because it certainly feels, doesn't it, when you go shopping that things are getting more expensive. That basket of goods that you talk about. What what has it gone from and what is it at now?
The latest figures, July's numbers for food inflation from the Office for National Statistics, put food inflation at 4.9%. That was an increase, a small increase on the previous month's figure, but it continues a trend. If we recall, after Russia's invasion of Ukraine, that had an enormous upwards impact on food prices because Ukraine, as people became familiar, is a source of grains, uh, cooking oil as a consequence, and fertilizer, hugely consequential in food production. Food prices went through the roof. Uh, they then fell back and they fell back actually below the rate of consumer price inflation. But in the last couple of months, that has flipped and food is once again running ahead of the headline rate of inflation. So, CPI inflation 3.8%, food inflation 4.9%. So, there is upward pressure on food and that really matters because food is a non-negotiable. It's not a luxury. Albeit we can adjust our shopping accordingly, we still need it. We can't avoid it. It makes up a huge proportion of our spend and a really the biggest proportion of all of those on low incomes. Uh, so it really matters.
Do we know why we've seen that rise more recently? Is it is it because Ukraine is still going on?
It's a mixture. Weather's a big factor in food production and it affects different commodities in different ways. Talk to British producers and British retailers and they will tell you that the cost of labour, the, uh, introduction of those national insurance increases, employers' national insurance, uh, imposed by the Chancellor in the budget, they kicked in in April. There's also the minimum wage increase. It went up by over 6%, great for the workers. Everybody politically supports it. But the combination of those two things, the increase in national insurance and the increase in the minimum wage, is, uh, part of it. Uh, demand also fluctuates up and down. More demand can increase, uh, prices. Supply chains are quite tight for food and some of it's just plain commodity prices. Chocolate, it's got more expensive and you can't make it without the raw materials.
Well, what else apart from chocolate's gone up particularly?
Quite interesting. Some of the sort of staples have risen in a way that people will have noticed. I hesitate to call beef a staple, but beef is the one that jumps out to me. 24% increase year-on-year in the cost of beef. Uh, coffee, I've mentioned, 18%. Butter and chocolate both up around 17%. A pint of milk is 11% more expensive than a year ago. Bakery goods, kind of stuff you might buy for breakfast to go with your cup of coffee, 7% increase. So, you can see a broad range of stuff.
Yeah. I mean, you can live without chocolate, arguably, but butter and milk and baked goods, it's a bit harder, isn't it?
Coffee. Live without coffee.
Um, no, coffee is the one non-negotiable. Um, let's talk about energy then. Uh, food obviously is one part of the picture, but energy prices going up yet again.
I mentioned Ukraine. Ukraine and without turning it into a a recent history lesson, that was the the huge impact on prices was the the energy crisis as it became again. That has passed and energy prices have leveled off in the last 18 months because gas prices have leveled off. But we've just had a small increase, but an increase nonetheless, in the price cap set by the regulator, Ofgem. But the driving force of those changes aren't gas prices. It's what I call policy costs and the cost of running the grid. We are going to be spending a little more on managing the grid. All the renewables that are on the grid, wind farms, uh, all that power is produced in the north of Scotland primarily. The demand is in the south. That the grid can't always cope with managing literally transporting that grid. So, it pays wind farms to switch off, one of the perverse, uh, impacts of the energy transition. People hate it. It's going to add about a pound and a half to your monthly bill. Also, adding about the same amount, uh, the government's extended something called the Warm Homes Discount, which is a payment of £150 to those on lowest incomes. So, that's a choice again. Now, altogether, that's not very much, £35 a year, but it is striking and the cost of the energy transition and net zero is becoming more and more politically salient. It is the fact that those costs have pushed up bills even slightly, you can see has been getting a lot of negative coverage and I suspect will continue to if energy prices bump around the level they are now, even if gas prices are falling.
So, inflation, the Bank of England forecast inflation to peak at around 4% in the autumn and then hopefully, uh, start coming down. But of course, for now, everything seems to be expensive. Uh, petrol, rent, uh, flying, you know, if you take a flight abroad on holiday, that's gone up as well. What What are your thoughts about inflation and where we are?
What is interesting is the markets and those who aren't just paid to monitor this stuff but get paid by monitoring this stuff are pretty relaxed about this spike in inflation. Much more relaxed than consumers and households. Perhaps they can afford to be, but they feel that the the reasoning they have for the decline in inflation is sound. Um, another reason is interest rates have fallen, right? So that should help push down inflation. Uh, so they think that trajectory, but we've got to get there first and while we're getting there, prices are higher and we all feel it.
Yeah. What about wages? How how does that play into it?
This is the interesting bit because wages is the one bright spot in this picture. Wages rose 5% year-on-year. Wage increases have been running above inflation since the middle of 2023. Plenty of people say I'm not getting 5%, but these are average numbers and plenty of people are. So whether there's a big gap between how we feel and the reality, um, I suppose at the very least, we could say things would be, we would be feeling worse if wages hadn't been rising as quickly. I suppose what really counts if you're in government is you need to feel better in your pocket before you'll think things are working. But it is, it is true wages have been rising higher than inflation and continue to do, although the growth is slowing down slightly.
What we can do, I suppose, is look ahead to the next budget and sort of ask what the Chancellor might have up her sleeve.
Uh, it's tempting to say not much because the public finances are incredibly tight. The idea that there's some great giveaway budget that's going to do the sort of things that might help consumers like cut taxes, uh, I don't think there's any chance of that. She's committed to not raising taxes on individuals, but given those constraints, she's going to have to find a combination of spending cuts and tax rises and pray for a little growth. And there is some growth in the economy, but it's going to take a great deal more if she's going to be able to do anything to really lighten the load on households. Um, so we're going to have to um just live with those enormous pay rises, uh, that we've all been, the numbers tell us we've all been getting, uh, to get us through.
So if things are a little rough, is there anything we can do to make it feel a little bit easier? Well, let's talk to our money blog reporter Jess Sharp. For those who don't know, just explain what the money blog is and what your role is.
Yeah. So, I write for the money blog and the money newsletter, and we are the home of consumer and personal finance news at Sky.
So, we're talking about the cost of living. We all thought it was going to get better, didn't we? But we're sort of all stuck in this situation where you go shopping and it feels almost week by week that your basket is more expensive than it was previously. And readers to the money blog sort of have made this clear, haven't they?
Yeah, we hear from a lot of readers who sort of get in touch with us with their money problems or their financial issues. And people who are trying to get on the property ladder, people who are re-mortgaging, they're finding it's quite tough. So, that's that's a big issue. Food prices again, a big issue for people.
And of course, you know, we're all going to think about putting the heating on soon, aren't we, as well? And that's yet another concern for for people. Well, let's talk a little bit then about how we can avoid spending more than we need to because there are a lot of tips, aren't there? A lot of hacks.
Yes, definitely. I mean, with energy prices, like you were just saying, obviously the energy price cap just gone up. It's going to go up on the 1st of October. Lots of experts have been telling us that the thing to do to save there is to get yourself on a fixed tariff and to do it now before that energy price cap changes. Um, already we've seen there are more than 20 energy deals on the market now that beat the price cap. So, you can save money by doing that and I think when we spoke to, um, Uswitch about the deals that are available, you can get savings of more than £200 if you opt for one of those energy deals. Now, a lot of your energy providers will already offer a fixed tariff. So, if you really wanted to, you could just opt for one with that energy provider. But sort of best practice would be to search around, use a comparison tool. There's lots available online, MoneySuperMarket, uh, Compare the Market, that you can use to check, uh, what tariff that you could get. So, you're making sure that you're getting a good deal.
So, once you've sorted out your best tariff, what else can you do at home to save energy?
Well, there are lots of things that you can do around the house to make your home more energy efficient. You know, even from changing your light bulbs to making sure you've got energy-saving light bulbs. Changing the temperature on your boiler can be quite effective. You can save sort of between 6 and 8% on your gas bill if you change that and turn it down. So, that can be quite helpful. And then you've also got washing your clothes. Um, put them on a 30° wash and do a shorter cycle and make sure you're like filling the washing machine up as much as you can. It's quite useful to check with your supplier if they offer discounted rates if you use your energy at off-peak times.
Yeah, clever idea, isn't it? Do your laundry in the daytime if you're if you're able to. And if people are really struggling, there are there are grants available and also your, uh, energy supplier has has a duty to help if you really need it.
Yeah, if you're really struggling to pay your bill and you've sort of tried everything, um, it can be worth just contacting your supplier. They are required to help you in some way or another, whether that's to help you spread the payments, uh, over a longer period of time, um, or offer you some other form of support. Um, and there are lots of grants and schemes, uh, available for people in certain situations as well. If you're on a prepayment meter, um, you could be eligible to get a fuel voucher, which you can apply to your local council for if you're struggling to top the meter up. Um, you've also got lots of grants available if you want to make your home more energy efficient. So, if you need help with, uh, affording insulation so that you can bring the cost down, there are grants that you might be able to apply for. So, there is help around and Citizens Advice, uh, has a really good page on their website with all of the available grants.
Uh, let's talk a bit more about shopping then. What what what tips have you got there?
Unfortunately, food inflation is hard to avoid for anyone. It's quite difficult, but there are some things that might help to bring the cost down. Um, and a lot of these things are better to do all together rather than just trying one and expecting a massive difference. The first one is looking out for yellow sticker items. They sort of go on those items that are coming to the end of their shelf life and sort of need to be eaten in the next 24 hours or so. We actually went to all of the supermarkets and asked them specifically what time those products go on sale.
They're not going to tell you that, are they, Jess?
No, unfortunately.
Nice try.
Unfortunately, they wouldn't tell us. But sort of anecdotally, we know that they tend to do them in the afternoon and in the evening. And we've seen lots of people online saying that the the peak time sort of seems to be between 6:00 and 8:00 at night. So, if you're looking to bag a bargain, that might be a good time to go.
Before dinner.
Yeah, exactly.
What about things like gift vouchers and cashback?
This is a really handy tip and it's one that I've used quite often actually, not just in supermarkets, but in other stores as well. But there are lots of um cashback apps that you can download on your phone. The way that they work is you'd go around and do your food shop and once you know how much it's going to be, you would go onto the app and buy a gift card through, uh, through the app for the store. You'll get cashback off of that and that will be credited to your account and you can then use it on a voucher for somewhere else. So, that can be quite good. Um, Top Cashback is the app that I've used. There are different deals running all the time and if you are signing up for the first time, there's might be a special offer on as well on on different stores. So, that can be quite a useful way to save some money. And loyalty schemes obviously are another one, aren't they?
And this is the thing because you might find if you are a Tesco shopper, you've got a Clubcard, which makes sense. But if you're in a situation where you're not at Tesco and your closest supermarket is Sainsbury's, you find that you can't get the discount because you don't have an Nectar card. So, I think personally it's better to sign up for as many loyalty schemes as you can. And so then if you ever catch yourself not at your regular supermarket, you can still get those discounts that are available, uh, rather than forking out more money for essentially no reason other than you haven't put your email in.
And what about where they put goods in shops? Do they hide the cheapest stuff? Um, hoping you won't find it, or am I just being cynical?
No. No. I think, you know, you have to be aware of the psychological tricks that they play on you. We all know about the middle aisle trick that that's where your eyes are drawn to. So, it's best to keep your eyes open around the shop. But we also found that some products can be cheaper if you find them in the world food aisle. So,
One of the Money Blog team was at a Tesco Express and things like spices or coconut water, um, they found were cheaper in the World Food Aisle than they were in other parts of the store. Um, it might mean that you have to buy a bigger quantity because that's how you would get the discount, but ultimately you'd be saving money.
I have found that being more organised helps as well save money. So, I I will try not to go to the supermarket hungry. I'll go after I've had lunch and write a list.
Taking a list is is really key, I think, just to keep you on track. I don't think there's anything worse than doing a food shop and then coming home and realising actually you don't have enough dinners for the week because you've just impulse bought rather than planning out all the ingredients that you need. So, I think planning out what you'd like to have for dinner, so, sort of prepping seven meals and putting all of the things that you would need onto a list and then going to the shop and making sure you have those ingredients is a really good way to cut costs. Um, and yeah, never go on an empty stomach because that's a bad idea, isn't it?
That's always a bad idea.
What are you having for dinner tonight then?
The list. Do you know what? It's quite boring, but I think I'm having spaghetti bolognese.
Good choice. And just before we let you go, Jess, you're working on thousands more tips, aren't you? On all sorts of things, not just, uh, food and energy, but car insurance, holidays. Where do people go?
Yeah, you can find that in the Money Blog, um, which is on the Sky News website or the Sky News app, but we've also got our free Money Newsletter that goes out every Friday and that comes with a guaranteed tip of the week. So, you can subscribe to that on the Sky News site. Um, and then you're guaranteed to get a tip and hopefully you'll be able to use it over the weekend.
Great to have you on. Thank you very much. Enjoy your bolognese.
Thank you.
And that's it for this episode of the Sky News Daily. Remember to follow us on Spotify or Apple or wherever you're listening to this. Thanks for listening.