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7 ways to fight inflation

Paul Lewis / 15 June 2022

Inflation is back with a vengeance. Our finance expert Paul Lewis looks at the steps we can take to ease its effects on our wallets.

An illustration of people trying to hold down flying money.

I do not have to tell Saga Magazine readers about inflation. We all remember the 1970s when it peaked at 26.9% and the pound shrank in value almost as we watched. A £1 note (remember them?) was the same value then as a tenner is now. The first 20 years of this century enjoyed low inflation. But now it is back. April’s figures showed prices rising by 7% a year and the Bank of England has warned that figure could soon reach 10%. Food, transport and energy bills are soaring.

Here are a few tips to stop it hurting quite as much.

Smart

We are all paying for smart meters through our electricity bills and they have one big advantage – a display that shows energy use as it happens. You can see how expensive certain actions are, such as boiling a kettle. To save money in that instance, only put the amount of water you need in the kettle. If you have gas, it is cheaper to use the stove to heat up water. Dishwashers and washing machines are expensive, so use them on the coolest cycle. Even chargers and devices on standby use power – you can tell because they are warm – so turn them off when you don’t need them. When a light bulb goes, replace it with an LED one; they run cool and use less electricity. Knock a minute off your shower and turn down the power. Put less hot water in your bath – or share.

Bills

If you pay fuel bills quarterly, changing to a monthly direct debit will save money. Quarterly payers are charged premium rates and higher standing charges. If your energy bills are too much for you, ask your supplier about their hardship fund. Many give grants to help elderly customers or those with disabilities or medical conditions. Turn2us.org.uk has helpful pages – search ‘fuel poverty’ or call 0808 802 2000. Also search ‘struggling to pay energy bills’ at citizensadvice.org.uk. If you run a car then the price of a litre of petrol has gone up 30% in a year, raising the cost of a full tank from £69 to £89 – more if you use diesel. If you use premium petrol, try E10 unleaded. All cars manufactured since 2011 and most since the late 1990s can use E10 – check at gov.uk and search ‘check E10’. It will be cheaper and neither you nor your car will notice the difference. You can find the cheapest fuel near you at PetrolPrices.com.

Bank

It is easy to check the standing orders and direct debits on your bank account. Make sure they are accurate and up to date. Less well known is the third way to take money from you regularly – a Continuous Payment Authority (CPA). You will agree to one if you sign up for a regular expense online with your credit or debit card. These are not listed separately by banks. Some firms sign you up even if you make what you think is a one-off payment. Then the same amount goes out every month. Just tell your bank or credit card provider to stop the payment – they must do so immediately – then inform the firm what you have done.

‘IF YOUR ENERGY BILLS ARE PROVING TOO MUCH, ASK YOUR SUPPLIER ABOUT THEIR HARDSHIP FUND’

Food

The consumer organisation Which? claims we can save hundreds of pounds a year by going unbranded at the supermarket with products that, it says, almost taste the same. They are always a lot cheaper. If you need painkillers such as aspirin, ibuprofen or paracetamol, generic brands cost a fraction of the well-known makes. Also say ‘bog off!’ to BOGOF. Buy One Get One Free is just a way to get you to buy extra things. Resist it.

Specs

Non-prescription reading glasses can be £30 or more but they are very cheap to make. Independent chemists or even pound shops sell them at lower prices which means you can discard them if they get damaged.

Savings

Savings rates are still poor, but they are rising, and it is worth moving your money to the best. At the moment that is American bank Chase, which pays 1.5% on its instant access account – but only for smartphone users. Marcus now pays 1%. Moving your money every few months is important, especially as interest rates are rising. You get more if you tie your money up for a time but, as rates are rising, it may not be good to do that for longer than one year. Cash ISAs generally pay lower rates than standard savings accounts. Unless you have six-figure sums or pay higher-rate tax, non-ISA accounts are better value. The first £1,000 of interest across your savings is tax-free. See Savings Champion.

Tax

If you are still working, you can save tax by claiming the working from home tax relief for the two lockdown tax years 2020/21 and 2021/22. It is worth £62 a year for a basic rate taxpayer, double that if you pay higher rate tax. You can get it if you had to work at home at least one day in the tax year. Most workers did, of course, because of Covid. It is harder to claim for 2022/23 as no Covid restrictions apply. But if your employer makes you work at home because they do not have the facilities for you, then you can claim it for this tax year too. Search ‘working from home’ at gov.uk.

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Disclaimer

The opinions expressed are those of the author and are not held by Saga unless specifically stated. The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.