According to the latest data, UK inflation rose to 5.1% in November 2021 as measured by the consumer prices index (CPI), the highest point for several years. Aside from a one off spike of 5.2% in 2008, inflation hasn’t been this high since the CPI rose to a staggering 7.2% in March 1992.

In the face of these rising costs, it can be a struggle to keep on top of your bills, however the personal finance experts at money.co.uk have put together some handy budgeting advice to help people negotiate the choppy financial waters ahead.

James Andrews, Senior Personal Finance writer at money.co.uk said: “The recent rise in inflation is going to put additional strain on UK households, particularly those that have struggled financially over the last year due to COVID-19.

“The challenge with inflation is that it can eat into your earnings no matter how careful you are – with bills like council tax and energy being inescapable. That makes effective budgeting more important than ever.

“Current inflation is being driven by fuel and energy prices, which are expected to drop in the months to come, but it’s important to remember that just because inflation falls, that doesn’t mean prices will drop, merely stop rising as quickly.

“Even if you’re in a relatively stable financial position, it’s still a good idea to review your household budget when inflation is high.

“One of the simplest ways to pull this off is by creating an ‘envelope’ budget. This simply means separating your money out into pots, or envelopes, for spending on different things. For example, you can create a pot each for household bills, food shopping and rent or mortgage payments.

“If you’re comfortable doing most of your banking by app, you may find that your current account provider lets you create these pots to separate out your money already – with the likes of Monzo and Starling can offer this service.

“If not, you can set up direct debits to easy-access savings accounts to hold money for different spending categories, or even go fully old school and withdraw the money as cash and put it in physical envelopes – although you might find it harder to pay some bills this way in the current world.

“Normally when you’re hoping to bring the cost of your household bills down, it would be a good idea to shop around for a new gas or electric provider. However, prices are currently at an all time high – so you should be incredibly wary of switching at times like these.

“Most reputable firms will caution you against switching at the moment, so if someone is trying to offer you a deal to switch, make sure to research it thoroughly before making any kind of decision.

“To find out how inflation can affect you, take a look at money.co.uk’s handy guide: https://www.money.co.uk/guides/what-you-need-to-know-about-inflation.htm”