Middle-class families have seen their cost of living rise by as much as 10% over the past year – nearly five times the official rate – as food prices, fuel costs and mortgage repayments have soared.

Last week, the Office for National Statistics said that the consumer prices index, the government’s preferred measure of inflation, rose at an annual rate of 2.1% in October, up from 1.8% in September.

Petrol prices alone jumped 2.7p per litre – or 12.1% – in the year to last month, partly due to the increase in fuel duty that came into effect on the first of the month. Oil prices are also trading close to $100 a barrel.

Food and drink prices also shot up by 4.7% – their fastest pace for 14 years – because food factories are having to pay 6% more for raw materials such as wheat, milk, meat and vegetables than a year ago.

The cost of milk, cheese and eggs leapt 11.3%, while Sainsbury’s cheapest bag of apples has leapt by 140% to nearly £1.20 per kilo, and a loaf of Hovis bread now costs £1.04, up from 96p.

Retail experts are predicting a 30% rise in family-food bills by Christmas, with turkeys hitting the £100 mark.

Once other costs such as higher mortgage payments are taken into account, the average rate of inflation jumps to 4.2%, against 3.7% this time last year.

However, some families face personal inflation rates that are far higher even than this rate. This is because the inflation rate is based on a basket of products that is weighted according to average spending patterns. If your family spends more on some items, your personal inflation rate could be higher.

Shona Dobbie of investment manager Alliance Trust, which conducts regular inflation studies, said: “The main problem at the moment is that the prices of basic goods such as food and petrol, that people have to buy, are rising at the highest rate.”

It’s certainly not a pretty picture for Simon Reynolds, whose high transport costs are becoming an ever-heavier burden on the family finances.

His household’s annual rate of inflation, including mortgage and council-tax costs, has soared from 4.2% to 6.3% in the past 12 months. Reynolds, a 43-year-old financial consultant who lives in Norwich with Lindsay, 46, and their two children, Oscar, six, and Thomas, three, said: “I drive a lot with my job and would estimate my monthly diesel spend at about £320.

“Lindsay spends a further £80 or so a month on diesel and we also spend a lot on cheese as we often have tasting evenings with friends.

“I feel that we pay through the nose for food in this country, despite supermarkets putting the squeeze on suppliers.”

Fortunately for Reynolds, and the millions of other Britons in the same situation, there are ways to cut costs and fight rising inflation.

Remortgage

Homeowners coming to the end of two-year fixed-rate mortgage offers between now and December 31, are expected to suffer a £500m payment shock due to a raft of interest-rate rises in the last 18 months, according to research by investment bank Morgan Stanley. That’s the largest mortgage hit of any quarter this year.

However, the figures assume borrowers stay on their lender’s standard-variable rate when they come to the end of the deal. These can be as high as 8.19% with Birmingham Midshires, or 8.1% with Bank of Scotland.

Lenders can increase their standard variable rates (SVRs) at will, even if the Bank of England does not cut interest rates, as seen last week when Standard Life Bank became the first to up its rate as a result of the credit crunch. Its basic mortgage rate rose by 0.15 percentage points to 7.46% or 7.66% (depending on the value of your mortgage relative to the property), despite the Bank rate sticking at 5.75%.

By switching to a new base-rate tracker deal, which will fall if the Bank cuts rates next year as expected, you could cut your mortgage repayments by hundreds of pounds a month.

Cooperative Bank is offering a two-year, base-rate tracker with a rate of 5.59% and a £999 fee, which includes free valuations and legal work for remortgagers.

Suppose you took out a fixed rate loan at 4.24% with Britannia building society two years ago, with repayments of £812 a month on a £150,000 mortgage, but the deal is coming to an end.

If you went on to the SVR, you would pay £1,084 a month, but if you switched to the Coop’s deal, you could save £155 a month – or £1,860 a year.

Annual saving: £1,860

Use the web to save on food

A new breed of website can help consumers save hundreds of pounds on shopping over a year.

At moneysavingexpert.com/ reductions, you can see the discounts on offer at the big supermarkets.

It is updated by industry insiders who know which stores are offering discounts, when and on what products.

On Friday, for example, a Sainsbury employee said everything in the chilled section at one supermarket was reduced to 20p by 7pm. Another post from a Morrison’s staff member said the price of cakes was being cut at 4.30pm at one store.

Another site, mysupermarket. co.uk, searches for the best online-shopping deals.

You put in details of what you buy, the supermarket you usually use, and it works out if you could get it cheaper elsewhere.

For example, a typical family’s weekly basket might cost £150 at Waitrose but only £112 at Sainsbury’s. By working out which products are cheaper but similar in terms of quality, you could save about 16% on your shop or about £600 a year.

Saving: £600

Slash your fuel bills

The website petrolprices.com allows you to find the cheapest fuel within 10 miles of your postcode.

In some cases, the difference can be as much as 14p a litre, saving a typical family up to £380 a year, according to the AA.

Saving: £380

Clever with a credit card

Take out a credit card with a 0% introductory deal, withdraw the cash and put it into a high-interest savings account.

When the 0% period is coming to an end pay off the debt with the savings.

If you had £20,000 of credit-card debts at 0% and put your cash in an account at 6%, you would be able to earn £1,200 in a year.

Alternatively, at the end of the 0% period, shift the debt to a new card with a long interest-free balance-transfer offer and keep earning.

This usually means paying a balance-transfer fee of about 2% of the debt shifted, but it is still profitable.

For a fuller explanation, go to moneysavingexpert.com/stooze.

Saving: £1,200

Milk loyalty schemes

You can get loyalty points by signing up to a card scheme such as Tesco Clubcard or Sainsbury’s Nectar.

So, if you shop regularly in one of these stores, it’s worth taking advantage of them.

With the Tesco scheme, for example, you get one point for every £1 spent, but if you redeem these in Tesco’s special Clubcard Deals brochure, the value of each point rises to 4p, giving a 4% discount on all spending.

Saving: £360

Total saving over 12 months: £4,400

PERSONAL COST OF LIVING TAKES A LEAP

TECHNOLOGY director Matthew Perkins, 33, and lettings manager Sky de Rome, 27, have seen their personal inflation rate – how much their cost of living has gone up – jump to 9.6% from 4.5% a year ago, the Office for National Statistics says.

The couple think about three quarters of their monthly spend goes on mortgage payments towards their south London home, so they have been hurt by five interest rate rises.

They also spend about £600 a month on food and drink, where prices are up 4.7% over the past year, and about £150 a month on petrol, up 12%. Perkins said: “We eat quite a lot of fruit and I am also partial to a bacon sandwich, so it’s bad news that those products are increasing in price.”

But their relatively low mileage means they will be less affected by petrol price hikes than most.

“Both of us work within two miles of our front door, so neither of us has a long commute,” Perkins said.

“And although Sky does drive a lot for her job, it’s all in the local area.”

FOOD FOR THOUGHT

ONE way to offset rising food prices is to invest in an agricultural fund seeking to profit from the boom.

The funds invest in “soft” commodities, such as sugar and wheat, that have been soaring thanks to strong demand from emerging markets – hence the prices we are paying in the shops are also on the up.

Fund manager Schroders believes that we are at the beginning of a long-term agricultural bull market that could last 20 years.

Mick Gilligan of Killik, a stockbroker, said: “There are a handful of agricultural funds that let you profit from the bull market, and the number is increasing.”

One of Gilligan’s favourites is Schroders’ Alternative Solutions Agriculture scheme. It buys futures contracts on soft commodities.

Gilligan said: “Although it is listed in Luxembourg, this fund works in the same way as a UK unit trust from a tax point of view.” Other options include Eclectica Asset Management’s Agriculture fund. This buys shares in companies linked to agriculture such as fertiliser manufacturers.

A new Close Fund Management fund due to list on the London stock market offers another way for investors keen to protect their capital.

Called the Enhanced Commodities Fund II, it invests in a basket of soft commodities alongside metals and oil.

It has a six-year life and promises investors £1 back for every £1 they put in, along with a multiple of any increase in the underlying commodity prices.

That’s not to say that you should pour all your money into agricultural funds.

Stanhope Capital, a wealth manager, recommends having no more than 5% in commodities, of which just 1.5% should be in soft commodities.