The UK has experienced a huge 4.2% rise in inflation – the biggest jump in a decade.
Britons will be left feeling the strain for the foreseeable future, like much of the world, due to big challenges that have been faced as a result of the coronavirus pandemic.
Why have we seen this dramatic increase?
Fuel: Fuel prices have massively increased as a result of a big jump in the cost of crude oil. However, the UK has also decided to switch to a more environmentally friendly type of petrol (E10); this is more expensive than standard petrol costs.
Hospitality: There has been a steady rise in the cost of eating out at restaurants after the removal of restrictions. Many businesses in the hospitality sector suffered massively during the lockdown periods and business owners had to find a way to maximise their revenue when they were allowed to fully open up. This means higher costs.
Brexit: Tighter immigration laws after leaving the European Union have left several sectors short on labour. This has contributed to supply chain issues, particularly with the lack of HGV drivers who are currently present. Sectors are having to increase pay to incentivise new workers and that will lead to increases in the price of goods or services that are being offered.
What will this lead to?
A graph by the BBC has stipulated that housing and household services are set to rise by over 0.5%, the highest shift as a result of inflation.
Alcohol and tobacco prices have actually fallen during this period. Wetherspoons recently advertised the fact that they were selling 99p pints. This is because Chancellor Rishi Sunak made a lot of cuts on alcoholic beverages in his autumn budget, perhaps to incentivise people to go to pubs and restaurants in spite of the rising food costs.
Anyone who is on the breadline could be in for a difficult winter, especially if there is the expectation to provide presents to family members over Christmas. It is less about steep rises for one product and more about steady increases across the board that will leave families and low-income earners struggling to cope.
We highly encourage you to manage your money carefully over the winter months, even if you want to set aside some spare money to spend on Christmas gifts. Please do have a read of our budgeting guide for some ideas on how to make your money last a little bit longer.