Exeter, Devon UK • Jul 17, 2024 • VOL XII

Exeter, Devon UK • [date-today] • VOL XII
Home Comment ‘Triple whammy’ of soaring prices hits harder than ever before

‘Triple whammy’ of soaring prices hits harder than ever before

Pippa Bourne discusses the causes and potential implications of inflation and rising food prices.
5 mins read
Written by
https://pixabay.com/illustrations/man-figure-toy-pokes-fun-at-shovel-76196/

Pippa Bourne discusses the causes and potential implications of inflation and rising food prices.

As if the long-lasting cost effects of the COVID-19 pandemic did not cause enough anxiety for struggling families, the dents in wallets are only to be made deeper with the soaring inflation of energy bills and food prices. Even Aldi, Britain’s cheapest supermarket in 2021 is seeing problems in keeping products “cheap and cheerful” as inflation continues to rise exponentially.

It is normal to expect the natural increase in food prices. Take Cadbury’s Freddo chocolate bar as an example. A childhood treat that we all know and love, which, in 2000 could be bought for a single 10 pence coin. With an inflation of 4.36% per year, it has almost tripled in price.

This small chocolate bar is just one example. For the first time in 30 years, we are now facing levels of inflation which have risen to 5.4%, the fastest rate since the 7.1% inflation of March 1992. And the worst could still be yet to come, with gas and electricity costs set to rise further in the spring alongside the potential removal of the government price cap in April. In addition, rates are not expected to drop to The Bank of England’s 2% target until April 2023, proving a much ‘stickier’ inflation than anticipated.

Furthermore, Russia’s attack on Ukraine could cause great economic consequences on food prices worldwide. At times, both countries have been named “the breadbasket of Europe”, providing about a quarter of the world’s wheat and half of its sunflower products in exports. Russia is also a major exporter of fertilisers to the UK, which will consequently affect domestic food production. And as a result, an 8% inflation rate – a number we have not seen in more than 30 years – would not come as a surprise.

On a more national scale, businesses and companies are being faced with higher energy and transport bills due to the rising price of energy, which in turn is having a major effect on both shipping costs and supply problems. Without increasing their product prices for paying customers, these extra costs will begin to take their toll on businesses and will decrease profit margin.

Wages are failing to balance out the high costs of living and people on lower incomes are having to make the choice between “heating or eating”

Brexit has driven many EU workers out of the country, leaving a great labour shortage. Pay rises are being given as an incentive to workers, however again it is the customer that has to cover this cost, whether that be in food prices or increased tax. The new import controls require an increase in checks and documentation, meaning that supply is taking longer to reach the supermarket shelves, it is not reaching the demand, and therefore customers are having to pay more at the checkout than ever before.

As the cost of living increases in such a dramatic and consequential way as this, it would be expected to see an increase in the number of pay rises, in order to balance the two. But wages are failing to balance out the high costs of living and people on lower incomes are having to make the choice between “heating or eating,” which could have detrimental results on public health. Richard Walker, boss of supermarket chain Iceland, states that the high and increased cost of food has seen an “alarming” rise in the use of food banks, especially for struggling families.

But soaring prices are not only affecting those on a lower income. Having not seen these sorts of prices and inflation costs before, Generation Z are being forced to find a new balance between working to live, and living to work. With fees kept at a fixed interest rate, university loans are undoubtedly going to be harder to pay off.

With nothing confirmed as of yet, many people are wondering what the response to this soaring increase in prices will be, and what help may be available. Whilst The Bank of England’s traditional response to inflation may not work, the government could decide to cut taxes for consumers on items that are rising quickly. £12 billion has already been committed by the government to provide support for this financial year and the next to help struggling families, however this will not be adequate to cover the crisis which is only set to worsen in the months to come.

You may also like

Subscribe to our newsletter

Sign Up for Our Newsletter