EXPLAINED BY YOUNG PEOPLE FOR YOUNG PEOPLE 👨🎓👩🎓
What exactly is the Cost of Living Crisis #COLC?
A cost of living crisis occurs when the prices of everyday essentials such as heating costs, food and fuel rises faster than average household incomes.
The increase in the costs of everyday goods is measured by inflation, which simply records how fast the rate is rising year-on-year.
Wait, hold up hold up, what does inflation mean?
In simpler words, inflation is the increase in the price of something over time. For example, if a loaf of bread costs £1 one year and £1.09 the next year, then that's an annual inflation rate of 9%. In our graph further below, you can see that housing and energy costs increased by 19.2% in just 12 months (💀).
FYI - the Consumer Price Index (CP) is a fancy measure of inflation and deflation in the UK.
Why is inflation in the UK so high right now ?
Right now, inflation is being driven by the rising costs of fuel and energy bills (with average gas and electricity prices up by 53.5% and 95.5% respectively compared to a year ago), and the ongoing Russia-Ukraine war. Disruption to Russia's oil and gas demand and supply has had a global impact on energy prices.
What is the problem and why does it matter?
Simply put, average pay increases are not keeping pace with inflation. Wages excluding bonuses only rose by 4.2% between January and March 2022. However, when adjusted for inflation, pay actually fell by 1.2% compared to the previous year 🤯.
Evidence shows #COLC disproportionately impacts young people:
According to a survey of 1000 young adults aged between 18 and 25;
💰50% found that rising energy bills and food prices hit their finances the hardest.
💰More than 76% have been forced to change their spending habits to navigate the current financial landscape.
So what is the government doing about this crisis?
The Chancellor of the Exchequer delivered a Cost of Living Support package to Parliament on the 26th May 2022, The support to households from the package is estimated by the Treasury at £15 billion. One-off payments will be given to the most vulnerable: the elderly, those with disabilities, and those with the lowest incomes.
However, our point of view is that it's only a temporary measure and certainly NOT a long term solution to the crisis. Furthermore, more will be required (including addressing the financial challenges young people are experiencing as a result of the #COLC)!
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