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Inflation reaches 9%: what impact does this have on your finances? Business News

Inflation soared to 9%, the highest in 40 years. Prices are rising faster than wages, on average, which means people’s standard of living will fall this year.

Average wages excluding bonuses rose 4.2% in the three months to the end of March.

Around nine in 10 adults (87%) in Britain said their cost of living rose in March alone.

What causes the Cost of life rise?

Energy prices have been a key driver of inflation as oil and gas supply has been stretched while demand increases as the world emerges from the pandemic.

Rising energy costs have pushed up household bills, crushing households and driving up the headline inflation rate.

Russia’s invasion of Ukraine has further pushed up prices as Russia is Europe’s largest gas supplier and one of the world’s largest oil exporters.

The sanctions imposed on Russia have aggravated the supply problems. This came after a widespread disruption in the shipment of goods caused by the pandemic.

Cost of living: how to get help

The cost of living crisis has hit every corner of the UK, pushing families to the brink with rising food and fuel prices.

  • The Independent asked experts to explain small ways to stretch your money, including managing debt and getting free items.
  • If you need access to a food bank, search your local council’s website using gov.uk, then use the local authority’s website to locate the nearest centre. The Trussell Trust, which runs many food banks, has a similar tool.
  • Citizens Advice provides free help to people in need. The organization can help you find grants or benefits, or advise you on rent, debt, and budgeting.
  • If you are experiencing feelings of distress and isolation, or if you are struggling to cope, The Samaritans offers support; you can talk to someone for free by telephone, confidentially, on 116 123 (UK and ROI), email jo@samaritans.org or visit the Samaritans website to find contact details for the nearest branch.

UK petrol and diesel prices hit a new high this week.

Statistics from data firm Experian Catalist show the average cost of a liter of petrol was 167.6p per liter while diesel averaged 180.9p.

Compared to a year ago when petrol averaged 128.38pa liter and diesel 130.80p, the cost of filling the typical 55-litre has fallen from £70.61 to £92.20 £ for petrol and £71.94 to £99.48 for diesel.

How much have energy prices increased?

The Energy Price Cap, which sets the maximum rate most people pay for their household electricity and gas, rose 12% in October last year and 54% in April this year.

A household using an average amount of energy will now pay £1,971 for their dual fuel bill according to Ofgem calculations. That’s £693 a year more than last year. People using prepaid meters will pay an average of £2,070.

Prices are set to rise again when Ofgem changes its price cap in October this year, with experts predicting the average bill will hit £2,600 a year.

The government has offered a £150 council tax rebate for people living in houses in groups A to D. The rebate will be applied to direct debits from April. Households who are not in direct debit must speak to their local authority.

A £200 reduction on energy bills is to be applied from October. Then, the government measure was criticized because it does not target those who need it most and must be reimbursed by a levy on bills for the next five years.

If you’re having trouble paying your energy bill, you should talk to your supplier for help. Citizens Advice may also be able to help.

What else increases in price?

A spike in energy prices raises the cost of a range of goods, driving up production and transportation costs.

More worryingly, the cost of food is also rising sharply. The latest official data shows that food prices have risen by 5.9% over the past year and further increases are expected in the coming months.

Again, the war in Ukraine had a big impact. Russia and Ukraine are major suppliers of key commodities, particularly wheat and sunflower oil. This has caused the price of margarines and a range of other processed foods to rise.

A sharp drop in supplies has prompted some countries to protect their domestic markets, which could further impact prices. This week, India banned wheat exports. Indonesia, a major producer of palm oil, recently blocked palm oil exports.

The price of used cars has jumped 27% in the past year, due to the disruption of the supply of essential parts for new cars such as microchips.

How long will the cost of living cut last?

The Bank of England expects inflation to peak at 10.25% in October when energy bills rise again.

This will likely be much faster than average wage increases, meaning people will be able to afford fewer goods and services.

The Bank expects the cost-of-living squeeze to begin to ease next year as inflation falls sharply.

However, there are many uncertainties in these…

More about this article: Read More
Source: www.independent.co.uk
This notice was published: 2022-05-18 12:23:36

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