As a country, we are currently in the midst of a Cost of Living Crisis - such a crisis, in fact, that we have to capitalise it as if it was the name of a dystopian film. It’s all well and good hearing about it, but what actually is the Cost of Living Crisis, and how did it start?

 

The Cost of Living Crisis is predominantly caused by high rates of inflation, in the simplest terms meaning that money is worth less. However, wages aren’t rising to meet inflation, and families are finding it increasingly hard to get by with the cost of food, petrol, and energy all rapidly increasing. 

 

During the Covid pandemic, inflation fell because households were spending less due to lockdowns and furlough. Some households may have saved this money, leading to a big splurge at the start of 2022. Producers and companies struggled greatly with this for many reasons, including the fact that they had laid off staff at the beginning of the pandemic and supply-chain issues due to lockdowns in China. The solution? Curb demand by raising prices. 

 

Short-term factors have also exacerbated the issue. Just as these Covid-related issues were beginning to be resolved and inflation began to settle, Russia invaded Ukraine. Countries, in an attempt to show solidarity with the Ukrainian people, sanctioned Russia and refused to trade with them or utilise Russian imports. This was an attempt to economically tire Russia, and encourage them to end their war with Ukraine. Because countries all attempted to source oil from countries other than Russia at the same time, demand increased - therefore, as did prices. 

 

If oil costs more, as does the cost of fuel and petrol, and household energy.

 

The UK has been hit particularly hard by this, because of Brexit. Our exit of the European Union has weakened our trade links with mainland European countries, which makes it harder for us to source resources such as food and energy after we broke away from Russian affiliations. These resources become rarer, more valuable, and more expensive. 

 

But why can’t we just raise wages? For huge corporations, this is certainly a possibility - Aldi has made headlines with their national wage increase to £11/hr for all staff, not just the adults, and £12.45 for those inside the M25 in line with local living costs. However, for local and smaller businesses, they are just as hard-hit by rising energy costs as the rest of us. Take coffee shops for example: the cost of running refrigerators 24/7, alongside the cost of importing products, Wi-Fi and water bills, lighting and heating costs. It is not always as simple as raising wages - some small businesses struggle to even open their doors. For family businesses, this can be the difference between a roof over their heads and eviction. 

 

Tackling this crisis begins with government intervention, and there is help out there! The question is whether they are doing enough. The smaller-scale examples of this aid includes targeted help for the most vulnerable families. This could mean increased benefits or Universal Credit allowances. On a wider scale, we could be looking at tax reductions, perhaps for a limited time only, or scrapping VAT in household energy bills. 

 

Support is available for those who are struggling, and your MP should be on hand to tell you exactly what they are doing to tackle the crisis and advocate for your local area. The most important thing to remember right now is that we will make it through this, together.