The cost-of-living crisis is currently affecting most British households: as food inflation is at a record high of 16.7% and fuel prices soar to 130%. UK inflation rates are slowly decreasing but what does this mean for the British public?
As of January 2023, the inflation rate fell to 10.1 % whereas in December 2022 it was 10.5%. This is an encouraging decrease although the inflation rate remains in double figures. The Bank of England is hopeful that the inflation rate will fall to 4% by the end of the year. The Bank of England has plans of increasing interest rates to help reduce inflation.
But what does this mean for us?
Business owners will take out loans with interest rates that are higher than normal, and people will have to borrow money at higher rates.
How has this occurred?
The current situation with Russia and Ukraine, has had a huge impact on fuel prices. (When Russia declared war against Ukraine the fuel prices rose to $110 per barrel globally whereas prior to the war the price was $76 per barrel.) The current fuel shortage has led to fuel poverty for 10 million Britons. Although the government has provided fuel vouchers/ discounts to ease the price of fuel bills for the general public, it is still not sufficient to keep up with the inflation rates in the UK. Another impact on the inflation rate is Covid-19 Lockdowns as the government spent billions on the NHS and the furlough scheme to keep the economy afloat. Many lower-income households are feeling the pressures of inflation in comparison to higher-income households.
A study from the Food Foundation in September 2022 shows that 9.7 million adults experienced food insecurity. This has led to food banks becoming oversubscribed as people from middle-income households who wouldn’t need to rely on food banks now need the support due to fuel poverty. The food banks are under major pressure due to inflation as many people who donate food are unable to do so as they have had to tighten their budgets due to the current cost of living. The recent pressures have caused many food banks to turn away families in need as they do not have enough supplies to give to everyone. In November 2022, a study from a leading charity suggests that '320,000 had to use their services within a 6-month period.' The Inflation rate has a huge impact on families with young children as many mothers are unable to feed their kids and are now relying on the free school meals system to feed their children. Roughly 1.9 million children receive free school meals and over 2 million children are eligible for free school meals due to the cost-of-living crisis. Many parents are relying on food banks to feed their children and would rather skip meals to feed their children than let their children go without food.
A discovery from the Guardian states ‘Most full-time workers are unable to afford to feed themselves.’ A mother of 3 by the name of Ayesha was interviewed about how she is coping during the cost of living crisis . She is a business owner and cannot keep up with the current cost of living. She told the Independent that she has to go to the North Kensington community kitchen for help. Ayesha currently uses prepay meters and has noticed that she has to top up her meter more frequently due to the fuel prices.
This is the harsh reality for most people in the UK, as ''89% of adults in Great Britain continue to report that their cost of living has increased.' – a survey from the ONS suggests. Although there is a slight increase in wages, it cannot keep up with the rate of inflation. This has led to many protests/ strikes in public sector roles, as doctors and nurses are also feeling the effects of inflation.
What can we do as the general public budget better?
· Freezing fruit and veg
· Going to cheaper supermarkets
· Freezing leftovers
· Make sure electronics are turned off when not used
· Reduce travel expenses where possible
· Requesting support from the local council
· Cancelling non-essential subscriptions
· Cancel gym membership and exercise outside or indoors
· Find free things to do in your town
· Wear extra layers of clothes indoors and use blankets
· Cooking at home and avoiding getting takeaway
· Buy what is necessary