Top tips to fight inflation in 2023

6 min | 09 February 2023

The Chase team

Rising inflation is impacting households and businesses across the UK. Inflation peaked at 11.1% in the 12 months to October 2022 and, with energy costs expected to rise further, is likely to remain higher than the Bank of England’s 2% target in 2023.

However, inflation is expected to decrease after summer and the Bank is sticking by its 2% target – by 2024.

There may be no way to completely avoid rising costs across the board, but there are things you can do to soften the blow.

What does rising inflation mean for me?

Put simply, inflation describes the increase in prices over time. So, if inflation is 11%, it means the price of goods and services is 11% higher than a year ago.

Inflation is calculated by the Office for National Statistics (ONS), which tracks hundreds of products – such as a loaf of bread and a packet of butter – to compare average prices to the year before.

To keep up with inflation, you would need a pay rise of 11% after tax. If you have savings, you’d have to earn an annual return of 11% after any tax for the money to retain its value.

So, what can I do?

Some employers are offering perks, such as a one-off bonus, to help their employees manage the rising cost of living. Although employees may prefer a rise in wages, not all employers can or want to offer this.

If you're self-employed, you could put your rates up. An increase in line with inflation can be justified, especially if you haven’t raised your rates in recent years. However, reassure clients that they're getting the same great service and consider offering new services to boost your earning power.

If I can’t avoid inflation, how can I make my money go further?

It’s difficult to avoid inflation. Prices are inevitably rising, but you should always shop around for the best deal – whether for a mortgage, energy contract, broadband deal, or mobile phone contract.

You could also reduce your spending by cutting back on non-essentials. When shopping, you could opt for own brands or less expensive alternatives. Don’t forget that your bank or credit card provider may offer cashback or discounts with certain retailers. Keep an eye on sites you visit regularly for offers.

Here are more tips to cut spending where you can:

  1. Cancel redundant Direct Debits
    Check your bank account to see if all your Direct Debits are still relevant. If you're paying for subscriptions, apps, services, or memberships you no longer use, cancel the Direct Debit, or consider pausing them for a while. At Chase, it's easy to cancel your Direct Debits in our app.
  2. Monitor your energy use
    Rising energy costs are one of the things that are fuelling inflation, and your monthly energy bill is likely to have surged over the past year – even with the government’s Energy Price Guarantee (Opens in new window) A smart meter will show you in real time how much it costs to heat your home or have the tumble dryer on.
    Can’t pay your energy bill? Ofgem, the energy regulator, offers some payment options (Opens in new window)
  3. Fit a water meter
    Fitting a water meter could save you money because you'll only pay for how much you use, rather than paying a fixed rate. Meters also keep us mindful of water usage. There may even be free water-saving devices available through your water company.

Is it time to switch mortgages?

Mortgage interest rates have jumped in the past year, with the Bank of England’s base interest rate now standing at 4%. In November 2021, the base rate was 0.1%.

There's no crystal ball to tell us where rates will head in 2023, but interest rates are expected to continue rising to help slow inflation.

If you're on a tracker mortgage (a mortgage that goes up and down in line with the base rate), you have already seen your repayments rise in the past year.

If you're on a fixed-rate mortgage, your monthly payments won't be affected by rising rates. However, if you remortgage, you may face steep rises in your monthly repayments.

If you choose to remortgage, don't automatically stick with your current lender. Compare different providers or speak to a broker, especially if you or your partner are self-employed, as getting the lowest interest rate possible could save you tens or even hundreds of pounds a month.

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