Last updated 09:38, Wednesday, 02 April 2008

The average family faces a hike of nearly £200 in household bills this year, putting a further squeeze on disposable income, a report said today.

The cost of gas, electricity, water and council tax bills looks set to increase by £193 or 8.3 per cent during 2008, assuming all of the energy suppliers raise their prices, Capital Economics said.

It added that even if the remaining three big suppliers did not follow the lead of British Gas, NPower and EDF, overall utility and council tax bills would still rise by 6.2 per cent or £143.

But the group said real household income is unlikely to rise by much more than the 1.5 per cent increase seen in 2007.

As a result households’ spending power looks set to be squeezed further, contributing to a sharp slowdown in real consumer spending growth.

The biggest jumps are set to come in energy prices, with an average 15.1 per cent increase in gas bills and a 12.1 per cent rise in electricity costs, assuming all suppliers hike prices, or jumps of 9.9 per cent and 6.2 per cent respectively if they do not.

At the same time, water bills look set to match last year’s 6.8 per cent rise and council tax is predicted to go up by four per cent to average £1,145.

Overall households can expect to pay out £2,510 on average in utility bills and council tax, compared with £2,317 in 2007.

On top of this, consumers are also facing rises in food and petrol prices, while mortgage repayments are also higher following interest rate rises during 2006 and 2007.