Cost of living - latest updates: Huge drop in UK house prices predicted; energy bills to fall by hundreds (2024)

Savers who have Premium Bond accounts with NS&I will have their best chance of winning a prize in 15 years.

From next month, the prize fund rate will increase to 4% from 3.70% - its highest level since 2007.

Odds on each £1 Bond will therefore increase from 24,000 to 1 to 22,000 to 1.

The changes will see an extra £30m added to the prize fund, with an estimated 460,000 extra prizes up for grabs, NS&I said.

The bank has also increased its interest rates for variable products.

On its Direct Saver and Income Bonds, the interest rate is increasing from 2.85% to 3.40%.

In this edition of the Business Podcast, Emma Crosby, sitting in for Ian King, is joined by a leading economist as revised GDP figures show slight growth for the first quarter of the year.

Plus she talks to the boss of Nationwide as the building society warns that continued mortgage rate hikes are threatening a "significant drag" on the housing market.

And she hears from the Icelandic company turning carbon dioxide into stone.

By Brad Young, live reporter

Enjoying a drink in the summer sun may soon become more costly, as brewers and winemakers warn changes to alcohol taxation will increase the price of bottled beers, spirits and wines.

Some brewers are reportedly considering reducing the strength of beer to sidestep costs, while there are fears some wines may disappear from the shelves altogether.

Alcohol duty will be unfrozen on 1 August for the first time since the beginning of the pandemic and Chancellor Jeremy Hunt confirmed in March that it will increase in line with inflation.

Taxation on bottled beers and spirits is set to increase by 10%, costing the industry £225m, trade associations have said.

"With business costs set to soar, it's impossible to see how brewers can carry on exactly as they are whilst still avoiding customers paying over the odds for their beer," saidEmma McClarkin, chief executive of the British Beer and Pub Association.

Ending the duty freeze will cost the industry £225m "at an already challenging time", with brewers facing "mounting price increases across supply chains" in the last two years, she said.

The challenge for wine producers may be even greater, given the introduction of a new system of calculating alcohol duties on the same day.

Wines will be taxed more the stronger they get, rather than by the volume of liquid as they are under the current system.

This equates to another 10% rise in costs, so when the end of the duty freeze is accounted for too, taxation on the average 75cl bottle of 12.5 abv wine will be 20% higher, according toSimon Stannard, director of policy at the Wine and Spirit Trade Association.

"Alcohol tax rises will only further fuel inflation. It will heap more misery on consumers. And it will damage British business, especially those in the hospitality supply chain, who are still trying to recover from the pandemic," he said.

Alcohol levels in wine cannot be reduced in the same way as beer, he said, because it changes the product.

Wine from hotter countries, which naturally produce stronger wines, will be "penalised most of all", he said.

Draught products in pubs will not suffer the same fate due to a government scheme that promises their duties will be up to 11p cheaper than for bottled or canned products.

The treasury has been contacted for comment.

We want to hear your stories – which you can share here:

• Your Reporton Sky News apps
• WhatsApp
• Email

By sending us your video footage, photographs or audio you agree we can publish, broadcast and edit the material.

The standing charges on energy bills should be abolished or reduced, bosses in the sector have said.

The system penalises those trying to keep their energy bills under control, said the boss of British Gas owner Centrica.

The standing charge is a fixed amount that people pay regardless of usage and funds the upkeep of the electricity and gas grids.

"The standing charge hits those who are careful about their energy use hardest – and these are often people from low-income households and prepayment meter customers," Centrica chief executive Chris O’Shea told the Sun newspaper.

Greg Jackson, chief executive of rival Octopus Energy, agreed, calling for unit rates to be increased instead.

"Standing charges are too high," he wrote on Twitter.

"Costs should be moved on to unit rates with extra support for low-income/disabled customers."

If this happened, some poorer people, such as those with large families or in poorly insulated homes who need to use more energy, could see their bills rise.

Business correspondent Paul Kelso explains how the new energy price cap will affect British families - and how prices will change in the coming months.

Fruit, vegetables, rice and tuna are among products coming down in price, as scrutiny over retailers increases.

With food inflation at 18.4%, supermarket bosses denied claims of profiteering while appearing before a select committee of MPs earlier this week.

Today, Tesco has said it will cut the cost of everyday items by 13% on average.

Pasta will see a 5p reduction and a four-pint bottle of milk will fall 10p, to £1.45.

Sainsbury's and Aldi also confirmed drops in the price of milk, which saw rampant inflation over the past year.

Tesco chief product officer Ashwin Prasad said: "We know that more than ever our customers are looking for great value, and this huge round of price cuts on 500 key household essentials will help their budgets go a little further.

"And we'll continue to work closely with our suppliers to pass on price cuts to our customers whenever we can."

Earlier today we reported on a 3.5% fall in house prices with further cuts predicted, in part because sellers are struggling to shift their houses at asking price as buyers face increasing mortgage rates.

New figures released by HMRC show the number of houses sold in May tumbled by 27% compared with last year.

The lack of transactions is a "more accurate" reflection of market health than house prices, according to Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors.

"Mortgage upheaval and inflation concerns have meant fewer buyers and more protracted negotiations, which is resulting in fewer transactions," he said.

Those who have to move will do so regardless, but sellers need to "price realistically" to attract any other customers in the coming months, said Jason Tebb, CEO of property search website OnTheMarket.com.

"With the potential for further interest rate rises and lenders pulling their mortgages and repricing upwards, borrowers are likely to have concerns around affordability," he said.

Across the UK, 80,020 transactions were recorded last month, which was 3% lower than in April.

One caveat to the headline figure is that there were more bank holidays in May 2023 than in the same month last year.

Britons are "putting their pets' lives at risk" by acting as DIY doctors to avoid vet bills, research has found.

More than one in three are diagnosing pets themselves or giving them human medicine, according to a report by Snoots Vet.

At the same time, they found 55% of people have seen their pet insurance increase and the average cost of a vet bill hit £572.

Approximately a quarter of pet owners put off going to the vet to see if the animal recovers and more than 40% have missed vaccinations due to the cost-of-living crisis.

"Pets are part of our family, but British pet owners are putting their furry family members lives at risk to save on costs, which could end up leading to more expensive treatment costs down the line," said founder of Snoots Vet, Jonathan Moyal.

The retailer might be best known for its homeware and fashion products, but it has just submitted plans to build almost 1,000 homes in London and Reading.

They are aimed at key workers like nurses and teachers, kitted out with John Lewis furniture and served by Waitrose shops and cafes.

The company said it is entering the market as private landlords leave to address the demand for rental properties.

In December, John Lewis unveiled a £500m deal with investment giant Abrdn after saying it wanted to build 10,000 homes over the next decade.

The plans submitted today will see 428 homes built in West Ealing and 353 in Bromley.

Later in the year, John Lewis wants to convert an empty warehouse in Reading into properties.

More than a third of the homes built will affordable, JLP said, although it did not specify what the rental costs will be.