Beware April's price hikes
Official figures this week revealed that one measure of inflation hit zero for the first time in 49 years in February - but for many of us it seems that prices are actually on the rise rather than falling.
According to the Office of National Statistics, food and petrol prices continue to rise, which mean many people's personal inflation levels will continue to feel high. This is likely to be further exasperated in April when a range of price increase come into force.
While it might be hard to avoid some of the extra expenses, there are others that you could dodge by taking action now:
Topping up your basic state pension
From 6 April, people who want to top-up their state pension by buying back missing National Insurance (NI) contributions will have to pay nearly 50% more to do so. The cost of buying back a year of NI contributions will increase from £420 to £626.
Make sure you stock up on stamps before 6 April – from this date Royal Mail is increasing the cost of a first class stamp from 36p to 39p and a second class stamp from 27p to 30p. The price of special next-day delivery, meanwhile, will increase from £4.65 to £4.95 for mail up to 100g.
If it’s been a while since you’ve been to see your dentist, then consider making an appointment before 1 April. After this date, the cost of a check-up for Band 2 treatment - such as a filing or root canal - will increase from £44.60 to £45.60. A check-up will also increase by 30p to £16.50. These increases only apply to people living in England.
Prescription charges also increase this April, from £7.10 to £7.20. So, if possible, try and make a doctor’s appointment before the 1 April and definitely make sure you collect any outstanding prescriptions before this date.
Pre-paid prescription certificates – which can save you money if you need a regular prescriptions - will also rise in price in April. Currently, a three-month certificate costs £27.85 but this will increase to £28.25 from 1 April. An annual certificate will increase from £102.50 to £104.
The good news is that from 1 April, cancer patients will no longer have to pay for prescriptions.
Prescriptions are free in Wales, so the above changes only apply to English patients. People in Scotland and Northern Ireland will see their prescription costs reduce by £1 from 1 April, as part of plans to phase out these costs.
BT plans to increase its phone line rental from £11.50 to £12.50 per month from 1 April – a move which will cost customers £150 a year, up from £138.
Customers will also see the cost of call set up fees rise from 6.85p to 8p per call and the price of daytime phone calls by 0.59p per minute to 4.5p per minute. The price of calling features such as Call waiting, Ring Back and Call Diversion will also rise from 1 April 2009.
However, those with a 12-month BT contract will escape many of the price rises, including the set up fees on any call made within their monthly allowance.
There has been speculation that BT is trying to encourage more people to sign up to 12-month contracts. If you are affected by price rises then this is one option; alternatively, see if you could save elsewhere by looking at packages offered by rivals Sky, Virgin Media or Tesco.
You can also slash your phone bill by opting for paperless bills or paying by direct debit.
Water bills are set to increase by an average of 4.1% to £300 a year from 1 April. While there isn’t a lot you can do to avoid above-inflation increase, you might want to consider getting a water meter fitted as this could potentially save you money.
A meter means you only pay for what you use, rather than an estimate based on the number of people in your home, among other things. Generally speaking, water meters are most suitable for households with more bedrooms than occupants.
If you are not sure as to whether or not you would benefit from switching to a meter it's worth speaking to your water company, which will be able to help you compare their measured and unmeasured tariffs with your household water consumption.
Alternatively, you could check out the online water calculators that are available at uSwitch.com or at the Consumer Council for Water's website.
Nintendo is increasing the price of a Wii games console from by £20 from 1 April, to £200. The firm blames the weak pound for the price hike.
The postponed 2p increase in fuel duty finally comes into force on 1 April, and as a result drivers are likely to see the cost of petrol rise. The AA estimates that pump prices will increase this year by another 2.12p as a result of the tax change, with the cost of filling a typical tank with unleaded petrol 5.53p more expensive per litre compared to the start of the year.
You can cut the price of petrol by shopping around for the cheapest pumps in your area, using websites such as petrolprices.com, or by using credit cards that offer discounts on fuel. Supermarket forecourts also tend to be the cheapest place to fill your tank, while garages on motorways and other busy roads tend to charge a premium.
From 1 April, the cost of a colour television licence will increase from £139.50 to £142.50. A black and white licence, meanwhile, will rise from £47 to £48.
Licence fees are based on a six-year BBC funding settlement that stated in April 2007. In year one (2008) and year two (2009), the licence fee increase is set at 3%. In years three (2010), four (2011) and five (2012), the increase is set at 2%. The BBC can set any increase in year six, up to 2%.
Other changes to watch out for:
* The average taxi fare in London will increase by 3.4% from 4 April. Transport for London says the increase will help drivers maintain their earnings and cover increased operating costs.
* Workers’ statutory paid holiday entitlement increases from 1 April, from 4.8 weeks (or 24 days for a worker working a five-day week) to 5.6 weeks of paid holiday (or 28 days).
* The basic state pension will increase by 5% from April, with the government updating retirees’ weekly entitlement in-line with the rate of inflation the previous September. Individuals receiving the basic state pension will see their income increase from £90.70 to £95.25 a week. Couples, meanwhile, will see their payments increase from £145.05 to £152.30.
* As if people trying to sell their homes don’t have enough to worry about, from 6 April every property must have a Home Information Pack in place and paid for - not just ordered - before it can be put on the market. Sellers will also be required to complete a new Property Information Questionnaire detailing pre-sale information such as the home's council tax band, parking arrangements, utilities and any structural alterations.
* When the new tax year starts on 6 April, everyone over the age of 16 will be able to save up to £3,600 tax-free in a cash ISA. People aged 18 and over, meanwhile, will have the option to invest up to £7,200 in a stocks and shares ISA, minus any amount up to £3,600 saved in a cash ISA.
If you haven’t used your ISA allowance for the current tax year (2008/09) then you should consider doing so before 6 April, or this opportunity to grow your money free of tax will be lost forever.
A scheme originally established in 1944 to provide protection against sickness and unemployment as well as helping fund the National Health Service (NHS) and state benefits. NI contributions are compulsory and based on a person’s earnings above a certain threshold. There are several classes of NI, but which one an individual pays depends on whether they are employed, self-employed, unemployed or an employer. Payment of Class 1 contributions by employees gives them entitlement to the basic state pension, the additional state pension, jobseeker’s allowance, employment and support allowance, maternity allowance and bereavement benefits. From April 2016, to qualify for the full state pension, individuals will need 35 years’ of NI contributions.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
There are limits to how much you can invest in any tax year. For 2011/12, the limit is £10,680. Of that, the maximum you can invest in cash is £5,340 and the balance of £5,340 can be invested in shares (individual company shares or investment funds). If you don’t take the cash ISA allowance, you can invest up to £10,680 into a stocks and shares ISA.