What is the cost of living crisis?
A term that refers to the fall in 'real' disposable incomes (that is, adjusted for inflation and after tax and benefits) that the UK has experienced since late 2021
What caused this to happen?
The COVID-19 pandemic brought on a lot of economic consequences, including the creation of supply shortages in dozens of industries from workers being too ill to work
Increases in demand for oil and gas caused prices to skyrocket because oil companies weren't able to continue to supply the goods to meet these demands
Other factors include:
1) The Russian invasion of Ukraine - Ukraine is one of the UK's suppliers of wheat as well as oil which meant that the war caused supply shortages so prices had to be increased to meet demand
2) Increased global shipping costs
3) Pandemic-related factory closures led to supply shortages
4) Increased government expenditure - taxes increased to assist the spending on the NHS to help COVID-19 victims, as well as on the vaccine
5) Naturally increasing inflation means that the prices of goods are always rising
Most affected by this:
Low-income households are among those who are most affected by the cost of living crisis as the increases in prices mean that a larger portion of their real disposable income was spent on essential goods
High-income households could still comfortably purchase these goods by spending less on non-essential goods, which means that they wouldn't have felt the impact of the crisis as hard
KEY TAKEAWAYS:
1) There are charities such as NSPCC, Shelter or Turn2US that specialise in helping people during difficult financial times.
2) Government assistance is also available which can be explored via the gov.uk website.
3) Purchasing goods that are less in demand or goods such as hybrid cars instead of petrol cars so you spend less in the long run
Komentar