The rising cost of living

Why are living costs increasing?

What exactly is the ‘Cost of living?’... Cost of living is the cost of maintaining a certain standard of living and this naturally has changed over time. From November 2021 to 2022, UK inflation reached its highest recorded level since 1992, affecting the affordability of goods for households. It was reported that around 9 out of 10 adults have experienced an increase in their cost of living, resulting in many falling into financial hardship.

This is due to a range of increases in essential services:

Fuel; Oil prices have hit a 7-year high, after decreasing during the pandemic, with the average price of petrol increasing by 2.2p per litre.

Shortage of goods; There is also a shortage of goods and materials in the UK, such as plastic, concrete, and steel, resulting in prices increasing. This goes hand in hand with the rise of shipping costs, due to global shipping companies also struggling after the pandemic.

Wage increase; Companies have had to deal with the demand for a raise wages, after being unable to fill empty roles, and these extra costs have been passed on to consumers.

Household costs; Household prices have also massively been affected, with the price of average food shops increasing by 94%. Not forgetting, that many people are expected to face household fuel poverty, with households spending a high proportion of income on energy bills.

Who does this affect?

The increase in the cost of living affects everyone, as it impacts how much people can spend and save. These higher costs of living have resulted in higher volume of adults (18+), struggling to pay their essential household bills; however, it does disproportionately affect people who live in deprived areas.

Cost of living and debt

More people are now financially vulnerable and therefore turning to credit and borrowing. For example, 17% of adults reported borrowing more money or using more credit than they did a year ago, and nearly 9 million people across the UK struggle with debt problems with more than 40% finding it difficult to repay them. Those who have not yet turned to borrowing, have instead been struggling to save, due to their earnings only just covering their outgoings.

How to cut your spending

If the increase in the cost of living is affecting you, there are many ways to try and cut your spending, such as looking into managing your subscription services, spending less money on groceries, and trying to manage your spending habits, to avoid overspending.

How to manage your debt

If you are worried about your debts, remember you are not the only one and there are solutions. A large percentage of people in the UK are in some form of debt and there is support out there to help you manage your expenses. If you are concerned about personal debt, don’t suffer in silence. Get in touch and we will help you find a solution and manage your worries.