The cost of an average, basic funeral in the UK has increased by 3.9%, according to latest research from Royal London.

This is higher than annual UK inflation of 1% (as measured by RPI). The average funeral is now £3,702 – up £140 from £3,562 in 2014.

Royal London’s National Funeral Cost Index 2015 reveals the price of a funeral has risen almost as rapidly as house prices since 1980. Since last year’s Index (October 2014), cremation costs have risen more than burials: the average cremation has risen by 4.2% to £3,294, while the average burial is up by 3.7% to £4,110.

The new Index reveals the cost of a funeral continues to be a postcode lottery. Funerals range from £2,976, for a cremation in Greenock, to £7,216 for a burial in Beckenham, Kent – a difference of £4,240.

On a national scale, Wales saw the most significant cost rise between 2014 and 2015: 5.2%. This compares to a rise of just 2.4% in Scotland, perhaps due to the removal of doctors’ fees in May 2015.  On a regional level, costs rose most in the West Midlands and Yorkshire and Humberside – over 4% in both regions.

The mutual says, given the price rises it is not surprising to see funeral debt rising in UK households. A survey of 2,000 people by YouGov found 13% struggle to pay for a funeral today. On an individual level, funeral debt is £1,318 – collectively, across the UK this equates to £98.9m.

Royal London says to cope with rising costs people are cutting-back when it comes to paying for essential items such as coffins, and optional elements such as flowers. The most striking example is coffins: last year’s Index found people spent £1,108 on average, but the 2015 report shows this has dropped to £989, a decrease of 11%.People are also exploring alternative burial options – 8% are now ‘woodland’ or ‘‘natural’.

Simon Cox, funeral cost spokesperson at Royal London, said:

“A loved one’s funeral can be expensive – a major (and sometimes unexpected) outlay, costing thousands of pounds. The rising cost of an average UK funeral is very concerning; it’s outstripped inflation considerably for many years –almost  in line with house price rises, which as we know continue to rise rapidly as demand outstrips supply.

“Our study shows people are striving to meet funeral price hikes, which they have little control over. Given the stressful situation, shopping around for a funeral is often not an option. Instead people are coping by cutting back on non-essentials if possible, and reconsidering how loved ones are buried.

“The UK funeral system still displays fundamental failings, which we reported last year. Vulnerable bereaved people are taking on increased debt; and we predict this problem will worsen if steps are not taken to tackle the many, persistent causes driving up the cost of funerals.”

In light of the findings, Royal London urges policy-makers to look at the underlying, interrelated issues that are causing funeral cost rises – including the scarcity of burial plots and the inadequate Social Fund Funeral Payment system.It wants a full and fundamental review of the Fund – the UK’s state benefit designed to help those struggling with funeral debt.

The mutual would like to see England, Wales and Northern Ireland follow Scotland’s lead, and scrap ‘cash for ash’ doctors’ fees.  It believes the UK needs access to more sustainable, affordable and locally provided services. It would like to see more transparent and innovative funeral service provision – across the UK.

It urges government to work with industry experts to find better outcomes for bereaved UK citizens – a benefit system which is fast, simple, sympathetic, valuable and economical; one which protects both vulnerable claimants and the tax payer from unreasonable costs.

Emma Lewell-Buck, MP for South Shields, said: “It’s worrying to see that funeral costs are continuing to rise, and that families on modest incomes are finding it increasingly unaffordable to give a decent send-off to their loved ones. This isn’t a problem that is going to go away on its own – we need to have a national conversation about how we address the rising cost of funeral services, and how we say goodbye to those who are close to us. The government needs to start acting on this issue before it is too late.”