Since 2021, and more so in 2022 the United Kingdom has experienced a cost of living crisis, with price increases showing up in everything from a loaf of bread to the monthly mortgage payment.
According to the Office for National Statistics (ONS), the Consumer Prices Index (CPI) showed that inflation was at around a modest 2% this time last year, whereas for July 2022 the CPI level was recorded at 10.1%.
This relentless increase in prices is having a knock on effect and affecting the average citizen on an unprecedented scale. With the even more recent surge in gas prices it is expected that inflation will continue to increase as we head into the Christmas period.
As a result, the true cost of the cost of living crisis is far more than “just” an increase in fuel prices, energy bills and essentials. The inflationary pressure is causing the purchasing power of each pound to fall while those with savings are seeing the real value of their savings drop at a worrying rate. Individuals are struggling to pay for basic necessities and are looking to an already troubled government for financial assistance. According to the ONS, the price of a pint of milk has increased by approximately 40% in the last 12 months alone with the average cost now at 59 pence. Potatoes, cheese and cereals have also increased at an average of 17%.
From a savings perspective, those looking to retire or rely on these savings will have to either continue working or look for additional income streams in the form of second jobs just to keep up with the pace of inflation.
As it is, property prices in the UK have been surging and even pre-pandemic it was difficult for people to get onto the property ladder. Now, with the Bank of England repeatedly increasing interest rates, mortgage rates are much higher than they were a year ago, making an already difficult milestone to reach even harder. Those with existing mortgages with variable interest rates are seeing overnight surges in their monthly repayments, and for landlords they are passing on this increase in costs to tenants who are already paying high rentals across the country.
The result of the cost of living crisis is not only a severe impact on the amount of money in our pockets but the real issue of the long lasting damage it is causing from the point of view of eroding the value of savings accounts and retirement accounts losing their value. This is having an impact on not only the current generation but putting the next generation at a severe disadvantage with sky high property prices, high interest rates, high rents and people barely being able to afford necessities such as food, electricity and heating.
