Cost Of Living

The term ‘cost of living’ is a phrase used to describe how much it costs to live in the UK taking into account household bills, fuel, groceries etc. The cost of living crisis refers to the current period where the rise in the overall cost of living far exceeds the growth of wages and disposable incomes. The cost of living rising faster and more steeply than disposable ‘real’ income (i.e. income after tax and National Insurance) causes people’s spending to exceed their income thus causing money worries and in some cases problem debt.

In fact, the recent cost of living crisis is set to cause UK living standards to encounter their largest drop since the 1950s.

Unfortunately, for UK households there are few everyday expenditures that aren’t rising. This is indicated by UK inflation currently being at its highest level since records began, rising 6.2% in the 12 months to February 2022, up from 5.5% in January according to the ONS.

Perhaps one of the most standout price increases comes from energy bills. Wholesale gas prices have been rising astronomically over recent months with the price cap increasing by an unprecedented 54% in April 2022 causing UK households to face soaring energy costs. Meanwhile, petrol prices have risen to their highest ever prices while food and beverage prices for consumers saw the highest annual growth rate (5.1%) in February 2022 since September 2011 (6.4%), according to the Office for National Statistics (ONS).

Unfortunately, all UK households will be affected by the rising cost of living. From filling your fridge to filling up at the pump we will all notice our money not going as far as it used to, reducing our disposable income and putting pressure on our finances.

Of course, the extent to which we will be affected by the rising cost of living will differ. For most it will mean a steep reduction in the standard of living and feeling the pinch on our finances but for others it could signal problem debt and the choice between heating our homes and feeding our families.

If you are struggling with the rising cost of living, there is help available. The UK Government has rolled out measures such as the council tax rebate, warm homes discount and loan on energy bills to try and ease the burden on struggling households.

The Government has also released their Help for Households campaign. The campaign, which was launched in July, aims to offer an easy way for people struggling with the cost of living to find the help they need. It lists help available for energy bills, household costs and income support amongst other areas. The Government has described it as a ‘tool kit’ for those in need of support during the cost of living crisis. You can learn more about what help has been included in this campaign on our Help for Households Guide.

For a full list of what help is available to support you during the cost of living crisis head over to our dedicated help article.