The UK is steadily seeing the effects of the cost of living crisis hit households and we are not yet in April where many other costs are due to rise. It has been found in the statistics that UK households are turning to credit and debt in order to manage cost of living standards. It has even been reported that food banks are turning away donations of root veg because people cannot even afford the energy to cook them.
The end of February saw Russia invade Ukraine and this has had an effect on the economy due to Europe’s reliance on Russian gas exports. The fuel duty cut may not make much difference at the pumps given the continuing rising prices. Along with other cost increases, these are driving manufacturing, transport and production costs up, which inevitably will be passed onto the consumer.
What’s the answer? Raise wages? Unfortunately pay is not rising in line with inflation. Given the rise of inflation, compared to wage rises, the average worker is seeing their total real pay as 0.19% lower than before the economic crash of 2008. The Money Charity predicts that real household disposable income is expected to fall by 2.2% in the 2022/23 tax year, which is the biggest fall in living standards since OBR records began.