Cost of living this and cost of living that! It seems like the new buzzword being used by the media and politicians alike, but has anyone actually explained what is driving this current crisis?
There are a few things at play that are currently driving this current cost of living crisis, such as inflation, supply chains, and energy. All these factors have come together at once creating a problem for the consumer and the business, we’re all feeling this pinch. In this article, we’re going to talk about the aforementioned factors to give you a better understanding of the current crisis.
Inflation
Inflation is measured by the Consumer Price Index, which measures the overall change in consumer prices based on a representative basket of goods and services over time. Businesses are affected by this as it means raw materials and service costs also increase, not to mention employees’ wages not going as far, thus meaning they may demand a pay increase to meet the cost of living.
Supply Chains
Transportation costs have increased across the board, whether that’s importing or exporting. There has also been a huge increase in the cost of Diesel, which increased a staggering 79% from December 2021 to July 2022. The cost of shipping containers also saw an increase of a jaw-dropping 800%, however, this is expected to fall.
Energy Costs
Non-domestic energy costs saw an increase of 29% between Q1 2021 and Q1 2022 and non-domestic gas prices went up 71% over the same time period, according to the government’s Quarterly Energy Prices data. This impacts everyone but in particular high energy businesses such as manufacturing, warehousing, hospitality, and refrigeration.