Belfast Telegraph

Saturday 22 November 2014

The cash squeeze tightens

Fuel duty rise adds to Ulster consumers' misery

Northern Ireland consumers face a bleak winter as the cost of another everyday essential is ratcheted up.

Today the Government implements an increase of 2p a litre on fuel duty which, when added to rising food prices and mortgage rates will squeeze disposable incomes in Ulster even further.

The fuel duty on diesel hits 50.35p a litre - the highest rate in Europe where the average is just 22.7p a litre.

And with the current price for a litre of bulk diesel just below the record levels of May 2006 at 79.68p a litre (excluding VAT) transport workers are warning that any further rise would have a knock-on effect on the whole economy - ultimately hitting consumers at the tills.

The duty increase takes the pump price of diesel to over £1 per litre which, according to the Freight Transport Association, will increase operating costs by an average of £870 to £35,600.

The cost of oil itself is at an all-time high of $$81 (£40.52) a barrel, having increased by more than 14% in the last month. Higher petrol prices at the pumps are now almost a certainty.

FTA director of external affairs, Geoff Dossetter, said: "Fuel represents a third of the operating cost of many lorries and significant increases in fuel prices are bad news for transport and thus for consumers.

"Road transport costs constitute an ingredient in the price of almost everything we eat, drink and use every day and it is essential that we contain those costs as far as we are able."

Homeowners face an equally tough time.

Recent figures from the Bank of England showed that mortgage rates were already at their highest level for nine years, despite the Bank of England's Monetary policy committee keeping base rates on hold at 5.75%.

Homeowners have endured five hikes in interest rates since August last year, adding about £80 a month to a £100,000 mortgage.

Last month the UK's biggest mortgage lender Halifax announced it was increasing interest rates on 20 of its tracker mortgages by between 0.1% and 0.2% for new borrowers. And Britain's second-biggest lender Abbey announced it was increasing its tracker rates by the same amount for new customers.

Some economists still fear mortgage interest rates could reach 6% by the end of the year.

In a cruel double blow house prices have been falling. The Royal Institution of Chartered Surveyors (RICS) and Ulster Bank reported a downturn for the fifth month in a row.

The picture looks equally grim for the agriculture industry which has been warning of hikes in food prices for some time.

Rocketing grain prices, an unprecedented demand for animal feed in India and China and a shift in land usage towards energy crops have all been blamed for the rise in every day essentials like bread, milk, eggs, poultry and beef.

The price of grain has almost doubled in the past year because unusual weather patterns have taken their toll on harvests, with shortages in areas which were once places of plenty.

Farmers struggling to get farm gate prices boosted protested in Cookstown last week over a supermarket pork promotion.

In a recent report the Citizens Advice Bureaux recorded a number of people with unmanageable debts during the past year. The charity said it was contacted by a staggering 1.7m people struggling to cope with borrowings - a figure which is up 20% in a year.

A spokesman for the Northern Ireland Council for Voluntary Action said: " People on the lowest incomes have been seriously squeezed in recent years, while people at the top of the earnings league have been doing very well. We urgently need to look at the problem of low pay.

"Big price rises also hit pensioners on basic pensions and others on benefits, which are not rising to take account of these extra costs," he said.

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