Cost of living spirals as price hike crisis deepens

Local & National

Friday, April 25, 2008

By Claire McNeilly , David Gordon and Margaret Canning

Northern Ireland consumers were today warned of a "cruel squeeze on their budgets" after Phoenix Natural Gas announced a 28% rise in its bills.

In a shock announcement, Phoenix told its customers to expect to pay an extra £130 a year on bills from the beginning of next month.

The bad news follows a stark warning that water bills also run the risk of running "out of control" in Northern Ireland.

It also comes after the revelation that consumers need to fork out an extra £800 on their annual grocery bills — as well as up to 27% more each month — just to buy the same products.

Added to that is the relentless increases in fuel prices — with petrol tipped to top £1.50 a litre by summer and diesel already costing over £1.20 in many forecourts — and the situation is looking very bleak indeed for householders.

Eleanor Gill, Consumer Council Chief Executive, today warned that the combined affect of these increases would be to put a strain on many Northern Ireland households.

"Any one of these price hikes would be bad enough, but arriving together, they represent a cruel squeeze on personal budgets," she said.

"Household needs don't come much more basic than food, transport and heating."

Referring to the hike in gas prices, David Strahan, general manager of Phoenix Supply, said: "Phoenix, like all energy companies across the UK, is experiencing record high wholesale gas costs."

He confirmed the rise would add £2.48 per week — that's £129 per year — to the bill of the average customer.

More bad news is also expected from NIE Energy, which supplies electricity.

Last month, the company said that it did not intend to review tariffs until autumn, but its spokeswoman, Kerstie Forsyth, said yesterday: "A review of electricity prices in the coming weeks looks increasingly unavoidable."

Meanwhile, a stark warning was last night sounded on the risk of "out of control" water bills in Northern Ireland.

The Consumer Council said the official estimate for the average tap tax had climbed to £386 for next year and £427 for 2011/12.

It also stated that a major shortfall in Northern Ireland Water's funds would jump from £16m this year to £30m in two years' time.

And on the food front, shocking new figures published by a leading supermarket comparison website showed an average rise of 15% in the cost of food across all three major retail giants here since last year.

But the findings issued by MySupermarket.co.uk also revealed a much more worrying trend — that some essential commodities such as bread, eggs and rice — have rocketed by as much as 27% in price in just one month.

A loaf of own brand white bread, for example, has risen by an incredible 10% (from 54p to 65p) between March and April in both Tesco and Sainsbury's, according to the data.

Mike Smith, a senior lecturer in economics at the University of Ulster, today warned of a prolonged period of rising prices for the basics of everyday life.

"It is now all the more urgent to insure that policies to raise living standards in Northern Ireland start to bear fruit," he said.