Chancellor John Healey will deliver his Budget next week as families continue to face high living costs. The government is under pressure to help households with rising energy bills, with the Ofgem price cap expected to rise again this winter.
Energy Bills and Fuel Duty Pressures
The Ofgem price cap for a typical household paying by direct debit is currently set at £1,723 a year. Energy analysts at Cornwall Insight predict this could rise to £1,999 in January. The government introduced a VAT cut on electricity bills this month, but the price cap still rose due to higher wholesale costs from the war in the Middle East, wiping out any saving for households.
Drivers are also feeling the pinch at the pumps. Diesel breached the £2 per litre mark for the first time earlier this month, though it has dipped slightly since. The average price now sits at 199.31p per litre, according to RAC figures, while unleaded petrol averages 174.31p per litre.
Motoring groups are urging the government to scrap a planned fuel duty rise in the new year. Fuel duty is due to rise by 3p in January, then by another 2p in March, reversing a 5p cut that has been in place since March 2022.
Food Prices and Tax Thresholds
Food prices remain high. UK grocery price inflation ticked up to 2.5% in the four weeks leading up to October 4, 2026, according to data from retail analysts Worldpanel by Numerator, up from 2.3% the previous month.
Tax thresholds are also still frozen, meaning more of your earned income is taxed over time if your pay increases. The income tax personal allowance is set at £12,570 and is frozen until 2031, instead of rising yearly in line with inflation. This freeze, known as fiscal drag, pulls more people into higher tax brackets as wages rise. It is also described as a stealth tax, as it lets the government collect more tax without raising the rate people pay.
What help do you most want to see announced in the Budget to give your household more money in their pockets? Let us know by taking part in our poll below, or email us at mirror.money.saving@mirror.co.uk.
