According to RIFT Tax Refunds, by March 2023, rising energy prices and stagnant income means household bills will cost 11% of the average person’s salary. This equates to a £929 increase since August 2020 – an average annual household energy bill of £1.042 compared to £1,971.
By October this year, bills are expected to see a drastic rise to £3,359, before increasing again in March 2023 to cost £3,616.
To understand the true impact of these rising prices, RIFT has analysed historic and projected changes in the average earnings. This research has found in August 2020, the average salary was £31,646 meaning that annual energy bills equated to 3.3% of income. This percentage has increased slowly over the past two years to the point where today, with an average salary of £32,390, bills account for 6.1% of income.
Since this average salary isn’t expected to increase before the end of 2022, by October, rising energy costs mean household bills will equate to a massive 10.4% of salaries.
Employers predict that, after 2022, employees will see a 3% rise in salaries but with inflation soaring past 10%, will this rise be enough? By March 2023, the average person is going to be earning £33,362 a year and giving 10.8% of it to their energy provider.
Bradley Post, RIFT Tax Refunds chief executive said, “People are rightly angry about the current situation. Energy prices are soaring while salaries remain stagnant.
“It means households are having to completely rethink their budgets and make real personal sacrifices in order to pay the energy suppliers. To this end, people are buying less, travelling less, even eating less.
“The government is pledging support but, while nobody can yet confirm what this will look like, it’s expected to be a drop in the ocean for most households.
“And don’t forget, this research is just looking at energy bills, not even accounting for the rising cost of food and fuel, etc, which will eat up even more of our earnings.”