Hard-pressed households across Oxford were hit with more bad news last night as inflation rose, placing more strain on tight family finances.

Bus users in Oxford were hit with a 6.5 per cent increase in fares because of spiralling fuel costs, which only added to increasingly hard financial times for businesses and families.

And it has left small, independent firms across the county - and even estate agents - complaining about a potentially-fatal combination of the credit squeeze and rising prices.

The Mattingley family from Headington Quarry, Oxford, have made radical adjustments to keep costs down. Housewife and mother-of-two Caroline Mattingley, 39, said: "To cut costs my husband now car shares with a work colleague. I have started buying more own label brands at the supermarket and we have cut out foreign travel altogether and take domestic holidays with family and friends.

"And I now write a weekly meal planner to make sure I only buy what we need."

Yesterday it was revealed the Consumer Price Index inflation rate for May - the preferred measurement of the average cost of a basket of every day goods - was 3.3 per cent, above a Government target of two per cent, and the highest since 1997.

And analysts predicted the rate could rise to four per cent by the end of the year.

Last night the highest recorded fuel prices in Oxfordshire was 137.9p-a-litre for diesel and 124.9p a litre for unleaded petrol. Soaring food prices were blamed for the dramatic increase.

Haulage Contractors Peter L. Mansbridge of Shippon, near Abingdon, said it might have to reduce the size of its fleet because of increased running costs, while Chipping Norton-based taxi firm Ambassador Cars has seen its daily diesel bill rise from £40 to £70.

Meanwhile, Hodsons estate agents in Bicester is to close by the end of the month, while Andrews has announced 13 redundancies in response to a downturn in trade blamed on the so-called credit crunch.

Last month, Oxford Bus Company revealed the price of diesel had risen by 71 per cent in a year.

On June 29 it will increase fares by an average of 6.5 per cent, meaning the cost of a single journey from Oxford railway station to Blackbird Leys will rise from £1.60 to £1.80.

There will be no increase in park-and-ride services or on the London-bound X90 Espress service.

Operations director Louisa Weeks said: "We have managed to delay any increase as long as possible and - although we can't make any promises - we will be working hard to ensure we don't have to increase fares again for a long time.

"No-one likes to pay more, but fuel represents one of our largest costs and we are reluctantly going to have to pass some of the extra costs onto our passengers. Some individual tickets will see smaller rises, others will go up by more and some won't rise at all."

THE Mattingley family, from Headington Quarry, Oxford, said it was getting harder to keep a lid on spiralling costs.

Secondary school teacher Roger, 37, and Caroline, 39, a full-time mother, said rising food and fuel prices meant they were having to watch their budget even closer.

Mrs Mattingley said: "We have two cars - a small Ford Ka, which was mine and a Focus for the family, but because the cost of filling the Focus up each month has risen so sharply, Roger now takes that to work and for the school run, and I use the Focus.

"To cut costs, Roger now car shares with a colleague, so they take it in turns to fill their cars up.

"I have started buying more own label brands at the supermarket and we have cut out foreign travel altogether and are instead taking domestic holidays with family and friends.

"We have also had our house properly insulated and replaced light bulbs with more energy efficient ones - the only upside of costs rising is we are actually becoming more green.

"And in terms of the food shop, I now write a weekly meal planner to make sure I only buy what we need.

"Paying for everything our children need is getting more difficult and it means Roger and I no longer buy those luxuries we once did, like clothes and music."

HAULAGE Contractors Peter L Mansbridge of Shippon, near Abingdon, said they were experiencing their toughest times since starting the business in 1984.

Company secretary and director Julie Mansbridge said: "Fuel costs are rising by the week and if they continue at this rate we may be forced to scale down the fleet."

The firm runs four lorries and 10 vans. Mrs Mansbridge said the weekly fuel costs made for shocking reading.

She said: "I get the figures every week and there's no let up. They are 50 per cent up on last year already, meanwhile our costs and our profits remain the same.

"If they continue to rise - and they look like they will - we'll have no choice but to start passing on price increases to our customers. If they then reduce their business with us, we would have no choice but to scale down."

NICKY and Mick Hancock, owners of the family cab firm Ambassador Cars, are driving out of Chipping Norton to beat rising fuel prices.

Mr Hancock, 60, said: "Our local garage put its fuel up three times last week. Me and Nicky are doing as much of the driving as we can, but whenever we go up towards Banbury, or out of the county, we fill up there to save a few quid.

"Before Christmas, twenty pounds would get one our nine cabs 200 miles - now it's 150. Our diesel bill has gone from £40-a-day to up to £70-a-day in just two months - that's up 60 per cent on last year. We can't put up our fares, because they're fixed by West Oxfordshire District Council and if we took some of our cabs off the road we would lose our contracts with our local councils. We are over a barrel."

HODSONS estate agents in Bicester is to close by the end of the month, while Andrews has announced 13 redundancies in response to a downturn in trade.

David Hodson, who founded Hodsons in 1970, said the Bicester office closure was partly because of the state of the market and partly because the lease was due for renewal.

He said most of the staff had been made redundant. Ongoing deals are being handled by offices in Abingdon, Didcot and Wantage.

He added: "Fortunately, we are also solicitors and that enables us to be fairly strong compared with people who are just relying on estate agency."

Meanwhile, the staff cull at Andrews has taken place at offices in Abingdon, Botley, Cowley, Headington, Kidlington and Witney.

Spokesman Ronda Green said: "Staff losses focus around services where client interest is currently very low."

Countrywide estate agents announced the redundancies after being bought by private equity group Apollo LP in May last year.

Jones and Turner, in Cowley, closed earlier this year, but there were no redundancies.

Harwell property agent Stewart Lilly, national president of the National Association of Estate Agents said: "The large companies, owned by chains, are finding the situation worse than smaller local companies, because they have higher fixed costs and a lot of managers who don't earn fees."