UK Households have been feeling the pinch over the last two years and the future is not looking bright. According to Jessica Egot, Guardian's chief political correspondent, the UK is to see "the biggest fall in living standards since records began". Inflation is projected to average 7.4% this year, the cost of utilities and fuel are hiking up, and taxes are increasing. It's no wonder Money Saving Expert's Martin Lewis says he is "out of tools" to help UK citizens manage the current cost of living.
Day to day costs are rising but wages are not keeping up.
Over the last 12 months, prices increased by an average 6.2%.
Prices are rising at their fastest rate for 30 years according to the BBC.
In January 2022, inflation reached its highest recorded level since 1992, affecting the affordability of goods and services for households. According to OBR, Inflation could reach a 40-year high of 8.7%.
There was a fall in wage growth between March and June 2020, brought on by the economic shock of the Coronavirus pandemic.
During the three months prior to January 2022 total pay in the UK only grew by 0.1%, with regular pay shrinking by 1% when adjusted for inflation.
Average gas and electricity bills are rising by £693 a year from April and could rise again in October.
Household budgets are stretched to the limit
As we head into the biggest fall in living standards since the 1950s the OBR forecasts that "real household disposable income will fall by 2.2% in 2022-23", “the biggest drop in living standards in any single financial year since records began.” With energy bills predicted to hit £2800.00 a year, 1.3 million more people to be pushed into poverty, and the biggest tax burden since the late 1940s, something needs to change.
The government is under pressure to do more to help struggling households.
More and more people will be unable to last the month and cover the basics, so where does the burden of managing this cost of living crisis lie?
David Brown, Hi's CEO recognises that without a wage increase, people will either need to move jobs or will no longer be able to live within their means. He continues to say "I think the government has done its job, the corporations now need to step in and do theirs, if you are going to increase prices, you should increase wages."