The six bills and household costs set to increase in first half of 2025 | Personal Finance | Finance

Households across the UK are bracing for a wave of rising costs in the first half of 2025, with essential bills and everyday expenses set to climb.

The increases come at a time when many are already feeling the pinch from the ongoing cost-of-living crisis.

Among the notable rises are water and energy bills, along with projected food price inflation driving up supermarket prices.

Council tax hikes, higher mobile contract charges, and an increase in the annual TV licence fee are also set to hit household finances.

Here’s a rundown of six household bills set to rise in the next few months.

Energy bills

The energy regulator Ofgem increased the price cap by 1.2% on January 1, raising bills for households on standard variable tariffs.

This means between January 1 to March 31, 2025, energy bills for a typical duel-fuel household who pay by direct debit average £1,738 per year, up from £1,717.

Price cap and fixed tariffs industry analyst Cornwall Insight predicts that the price cap could rise again in April 2025 to £1,762.

The energy price cap is updated quarterly and limits the amount suppliers can charge per unit of energy but does not cap total bills, as charges are based on actual usage.

Council tax

Households in England face council tax hikes of up to 5% from April 2025, with the government confirming it will maintain the existing cap on increases.

This decision means an average rise of more than £100 for Band D properties, adding to pressures on household budgets.

Councils providing social care services can raise rates by up to 5%, while others are capped at 3% unless they secure Government approval or hold a local referendum.

Communities Minister Matthew Pennycook described the cap as the “right threshold,” citing the financial challenges facing local authorities.

Government figures show that the average Band D council tax for 2024-25 stood at £2,171 – a £106 increase compared to the previous year.

The rise is expected to generate an additional £1.8billion for council budgets in 2025/26.

Mobile and broadband contracts

From January 17, Ofcom will ban telecom firms from tying mid-contract price hikes to inflation, requiring companies to specify increases in “pounds and pence.” However, some customers could still face notable bill increases despite these changes.

Previously, providers could raise prices annually in line with inflation plus up to 3.9%, resulting in 2023 hikes of up to 17.3% as inflation soared.

While inflation is now lower at 2.6%, consumer experts warn fixed rises could leave some worse off. For instance, a £3 monthly increase on a £24.99 contract exceeds inflation-linked adjustments, which would add just £1.62. Meanwhile, those on higher contracts might pay less than inflation-based adjustments.

Provider-specific price changes (effective from April):

• BT/EE: Mobile bills rise by £1.50/month, broadband by £3/month, and TV by £2/month. Financially vulnerable customers are exempt.
• O2: Airtime bills increase by £1.80/month, with no change to device repayments. Social tariff users and pay-as-you-go customers are exempt.
• Plusnet: Broadband rises by £3/month.
• Three: Increases range from £1 to £1.50/month based on data plans; broadband capped at £2/month.
• Virgin Media: Increases of £3.50/month, excluding social tariff users.
• Vodafone: Broadband rises by £3/month; mobile hikes range from £1 to £1.80/month. Vulnerable and social tariff users are exempt.

Food prices

Rising shop prices are expected to place further strain on household budgets this year, as food inflation begins to climb again.

After a period of decline through much of 2023, food prices began rising in September 2024, and the trend shows no signs of slowing.

Major UK retailers, including Tesco, Sainsbury’s, and Marks & Spencer, have cautioned that higher employer National Insurance contributions (NICs) announced by Chancellor Rachel Reeves will drive up costs, which are likely to be passed on to consumers.

TV licence

The TV licence is set to rise by £5 on April 1, increasing the annual expense from £169.50 to a hefty £174.50. For the estimated 3,600 households with a black and white TV, the cost of a licence will increase to £58.50 per year.

The fee increases every year in line with inflation until 2027 when the framework is set to be reviewed.

However, thousands of people can qualify for a half-price – or free – TV licence without realising, making it key to eligibility. People can do this here.

Water bills

Households in England and Wales face a steep water bill increase from April, with average bills set to rise by £86 for the year, according to industry regulator Ofwat.

The increase is part of a five-year plan to fund essential upgrades to water supply systems and reduce sewage discharges.

The hikes, though slightly lower than water companies originally requested, exceed Ofwat’s earlier proposals. Over the next five years, bills will rise by an average of £31 annually, but the largest jump is expected in the first year.

These figures do not account for inflation, meaning actual costs could be even higher. For customers of water-only firms, bills will rise by 22%, with an average charge of £234 annually.

Water UK, the trade body representing water firms, has defended the price hikes, stating they are essential to deliver “much-needed” investment across the sector.

While the changes are significant, there are steps households can take to reduce their water bills and offset the rising costs.