The UK has a high cost of living because of several variables, including taxes, pricey property, and transportation. Still, it also has a high level of life with good access to healthcare, education, and employment possibilities.
The annual inflation rate hit a 41-year high in 2021 and 2022 at 11.1% before declining in the following months to 10.1% in January 2023.
With inflation at its highest level in 30 years and a record-high rise in home energy costs anticipated starting in April, the government is experiencing a dilemma related to rising living costs.
Reasons Behind The High Cost Of Living In The UK
Given below are some of the major reasons why the cost of living in the UK is soaring and making it difficult for people to cope—
1. The Soaring Inflation
Once inflation increased to 5.4% in December, Britain’s affordability situation worsened. Low-income households are expected to be worst hurt by this since they already struggle to pay growing energy costs and universal credit cuts.
The consumer prices index (CPI), which the Bank of England anticipates to climb to 6% by April, has been predicted by some analysts to reach 7%.
The government must invest billions of pounds in the energy industry to stop the rise in heating expenses.
With Brent crude up 15%, oil prices have been a significant factor in the growing cost of living. Although the average salary uk increased, it fell short of the rising cost of living.
2. Gas And Electricity Bills
The UK is experiencing a high cost of living due to the energy crisis, with an average power bill of £700.
Households and companies have been impacted, making running difficult for them to run effectively.
The cost of oil and gas has also increased, with the price of gasoline rising to 191.53p a litre in July 2022.
The UK government has taken action to solve the issue by supporting energy-saving initiatives and investing in renewable energy sources.
Invest in renewable energy sources to combat growing energy prices to lower energy and gas prices.
Consider putting regulations and incentives in place to encourage consumers to employ energy-saving practices and equipment.
3. Rising Housing Costs And Rents
Many individuals find it challenging to save money and invest in the future since the cost of owning a property in the UK has increased continuously.
Rents have increased. As a result, homelessness is increasing and making it harder for individuals who need housing to find affordable solutions.
In the UK, renting is getting increasingly costly; the average rent for a one-bedroom apartment in London currently exceeds $2000 a month.
As a result, renting has become increasingly popular, which will likely cause long-term instability and insecurity.
As this is having a disastrous impact on those living in crowded and inadequate homes, the government has to intervene to make housing more accessible for low-income individuals.
4. Government Charges And Taxes
The UK government levies fees for goods and services, including healthcare, education, and transportation, and taxes like income tax, council tax, and VAT.
Although these taxes can make it difficult for people to pay for necessities, they support the nation’s infrastructure and public services, including the NHS and mass transit.
The populace treasures these. Consequently, they are essential for upholding a high standard of living.
The government must consider the impact of these costs and offer support and aid to low-income individuals and families.
But, since government fees like those for automobile registration, passports, and other items are too high, it becomes difficult to make ends meet.
This may involve tax breaks or financial assistance for necessities like food and housing.
5. Soaring Food Prices
Due to inflation, supply chain interruptions, and shifting consumer demand, food costs are high in the UK.
Families have been put under stress. As a result, the need for food banks and other aid types has increased, especially for those with lower incomes.
A family of four now spends more than £108 per week on food, and they spend £708 per month.
The COVID-19 epidemic has also worsened things by further disrupting the supply chain and driving up the price of imported items.
Due to shortages and price increases for products, including meat, dairy, and fresh vegetables, food costs have soared due to the weaker pound, severe weather, and the COVID-19 epidemic.
Grow your own food to save money on groceries and create wholesome meals.
Coping With The Rising Costs
Getting a job and a side hustle to increase your average salary uk is crucial in coping with the country’s rising costs.
Buying from thrift shops, using loyalty card points, organising your fridge, batch-cooking meals, freezing extra portions, freezing leftovers, and shopping in the supermarket’s clearance section are all ways to cut grocery costs.
The Energy Price Guarantee has kept household energy costs at an average of £2,500, so turning off electronics before going to sleep is important.
Increase energy efficiency, and maintain a strong relationship with your existing supplier. Insulating your loft space can save up to £380 a year.