What is the cost of living crisis?
“Cost of living crisis” – means: the crisis happening due to the increased amount of money needed to cover basic expenses such as housing, food, taxes, and healthcare. It’s the phrase on everyone’s lips right now, but knowing what’s going on and how it can impact you can be an exhausting task!
Covid, the war in Ukraine and Brexit are just some of the reasons people across the UK and the rest of the world are feeling the pinch more than ever. In this blog we’ve identified the key points that you should be aware of, and some useful tips to help keep things under control.
The Energy Surge
As the world has been coming out of COVID restrictions, the global demand for oil has dramatically increased with more people traveling across the country and the rest of the world.
The ongoing situation in Ukraine has only made this worse. Large parts of Europe have moved away from Russian oil and are looking elsewhere, however as Russia is such a large provider, this has increased the demand and therefore the price of oil from other countries has gone through the roof.
Energy suppliers are limited to how much they can charge their customers by the energy price cap, however this has risen to £2,500 a year (£208 a month) from the 1st of October 2020.
Cost of Housing – Rent, Mortgages & Interest Rates
It’s all down to a rise in interest rates! For mortgages, the interest rates get passed on from lenders to the borrower. That means one third of households who have a mortgage will feel the impact first. The rates have massively increased from 0.1% in December 2021 to the current rate of 2.25%!
Renters are also likely to be indirectly affected by the interest rates rise, as buy-to-let landlords pass on higher borrowing costs to their tenants. As if it wasn’t hard enough already… yay!
TIP: If you’re coming to the end of a fixed rate mortgage deal, look into whether you can agree a new rate in advance as experts predict further rises to interest rates over the coming months.
Increased inflation
Inflation is measured by comparing the price of average household goods to their price last year. The current rate is the highest it’s been in 40 years (9.9%).
Fuel prices are making transporting produce more expensive, and Brexit has made it harder to import from other countries as well as reduced the number of foreign workers in some sectors. It’s therefore costing more to make and transport products, meaning we (the buyers) pay more!
TIP: You can save on your weekly food shop in a number of ways:
Make a list and stick to it – plan exactly what you need to buy and try not to veer of course.
Shop online – your much less likely to impulse buy my shopping online compared to heading in store.
Switch to own brands – Many of the cheaper supermarket own brand products are indistinguishable from their branded counterparts, some of them are literally made in the same factories and cost a fraction of the price!
Look out for offers online, install the app Too Good To Go and check out the Tesco Clubcard offers – there’s always something decent.
What you can do to save
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