What cost of living crisis means for you - from mortgages and savings to wages and prices

People already struggling after 18 months of Covid now face a bleak winter of rising inflation, food price hikes, benefits cuts and soaring energy bills.

Along with shortages of everyday goods pushing up costs and the end of the furlough scheme this month – amid fears of job losses – experts warn a perfect storm will squeeze households hard.

The Organisation for Economic Co-operation and Development said the problem could last well beyond winter.

It comes after former Brexit Secretary David Davis had warned: “From the point of view of what you might think of as the new Tory voter, the plumber, the ­bricklayer, the lorry driver, there’s going to ­be a cost-of-living crisis.”

But Boris Johnson last night buried his head in the sand and denied we will suffer a winter of discontent, despite him slashing Universal Credit and hiking National Insurance ­contributions, which will hit society’s poorest the hardest.

© PA The Prime Minister has denied we will suffer a winter of discontent

The OECD predicted inflation could rise to 3.1% next year, a 1.4 percentage point jump from what it forecast in May.

Mr Johnson tried to blame the global economy restarting after the pandemic, but the OECD insisted UK inflation would rise faster and last longer than any other advanced economy and said many problems were specific to Britain.

Even Business ­Secretary Kwasi Kwarteng admitted there was a looming crisis here.

He said of next month’s UC cut and rising prices: “It’s a ­difficult situation, it could be a very difficult winter.”

Shadow Chief Secretary to the Treasury Bridget ­Phillipson laid the blame squarely at the Government’s door. She said: “Working families face a sudden squeeze on living standards on a scale not seen for a generation.

“Incomes are coming down, prices are going up, especially energy prices, taxes are going up, rents are going up, childcare costs are going up, fuel costs are going up, rail fares are up.

“The people of Britain face this not simply by chance, but because of the choices made by Conservative governments, this year, last year, and in the 10 years before. It is not a tragic, ­unforeseeable series of unhappy accidents that brought us here. It is choices which this Government has made.”

Mr Johnson said: “I think this is a short-term problem caused by the energy problems, the spikes in gas prices, and like many of the other supply issues we are seeing, including food, are caused by the world economy waking up after a long time in this suspended ­animation caused by Covid.”

Energy bills for around 15 million households will soar by at least 12% next month. Others face even bigger spikes on the back of a surge in wholesale costs. Higher costs of raw materials and shipping along with the lorry driver shortage are pushing up prices for an array of products and services.

© Barcroft Media via Getty Images Chancellor of the Exchequer Rishi Sunak holds the budget box

Food prices, which had been falling, are now on the rise.

And the cost of everything from building materials to secondhand cars have been driven up by ­shortages of one kind or another.

A National Insurance ­contributions rise of 1.25 percentage points next April to raise billions for health and social care will pile further pressure on households. It will cost £180 a year for those on £24,100, £255 for others earning £30,000 and £715 for a £67,100 wage.

The income tax personal allowance will be frozen until 2026.

Millions of older people missed out after the PM went back on another manifesto pledge by suspending the “triple lock” pledge that would have linked state pensions to earnings.

The Bank of England meets tomorrow on whether to raise interest rates. A rise would push up borrowing costs in a big blow to millions.

Here’s what the rising cost of living could mean for you

Mortgages


Video: US Poverty Declined Last Year As Government Aid Made Up for Lost Jobs (Cover Video)

Borrowers have benefited from low interest rates. And despite rising inflation, most experts don’t expect those rates to go up any time soon.

One of the Bank of England’s jobs is to keep inflation at around 2%.

One way is to raise its base rate, which is used to influence wider borrowing costs.

Economists think it will keep the rate at its record low 0.1%.

Paul Dales, of Capital Economics, said: “We suspect the Bank will hold off raising rates until 2023.”

Pensions

For those on the state pension, next April’s increase will be based on what inflation turns out to be this month.

It would have been much higher if the Tories had stuck to their triple lock manifesto pledge, as it would have risen in line with average pay.

Most retirees with a private sector defined benefit pension will not be affected as the annual rise is capped at 5%.

Also worse off are those with a defined contribution pension as, to keep pace with higher living costs, they will have to take out more.

Prices in shops

Households have enjoyed a lengthy spell of deflation, with prices falling year-on-year.

But that is changing, with shop price deflation easing from 1.2% to 0.8% in August.

There are signs food prices are rising year-on-year. And some non-food items, such as electrical products, have risen in price due to shortages and shipping costs. Those prices may rise even further.

British Retail Consortium chief Helen Dickinson said: “Retailers may be forced to pass on some costs to their customers.”

Public finances

Higher inflation is bad news for the nation’s finances. Among the biggest factors is a knock-on impact for Government borrowing costs.

Yesterday, figures from the Office for National Statistics showed how the tick-up in inflation added a hefty £2.9billion in interest payments last month.

When the nation’s debt mountain stands at an eye-watering £2.2trillion, any increase in borrowing costs caused by higher inflation in the months ahead is a headache that the Chancellor Rishi Sunak could well do without.

Savers

Savers have long been the forgotten victims of rock-bottom interest rates.

Although savings rates are on the up, it is still virtually impossible to find rates that beat, or match, inflation.

Research by Hargreaves Lansdown shows the most common reason for people not switching savings accounts is that they think rates are too low to bother with.

If inflation keeps rising, but interest rates do not, savers will pay more for living costs but earn no more from their cash.

Wages

Office for National Statistics figures show wages rose 8.8% in the three months to June, compared to the same time a year earlier.

That was mainly because many workers last year were on furlough or reduced hours.

But XpertHR found average pay rises in the three months to August of 2%.

The CBI and Pertemps Network found 24% of firms expect to raise pay above inflation, and 44% to lift it in line with cost-of-living rises.

Employees will use inflation and worker shortages to demand bigger pay rises.

Money worries

Money worries are a “ticking timebomb” across offices, factories and other workplaces, experts warn.

Four in 10 employers say finance- related stress is negatively affecting productivity and motivation.

More than half of workers now turn to their employer for support with problems such as debt, a Scottish Widows poll found. Six in 10 HR leaders said staff members are increasingly willing to discuss mental health worries with a manager.

Scottish Widows pensions expert Graeme Bold called on bosses to draw up “financial wellbeing” policies.

Internet Explorer Channel Network
News Related

OTHER NEWS

Wayne Rooney asked Xavi to make it stop during the 2011 UEFA Champions League final

Xavi is on the verge of becoming Barcelona’s new head coach after the Catalan club sacked Ronald Koeman on Wednesday. © GiveMeSport p1fj3bai2p1uummm3eu915nt13adt.jpg Koeman was dismissed following Wednesday’s 1-0 defeat ... Read more »

Russia blocks website that exposed Putin's cleaner-turned-millionaire 'mistress' and her '£74m business empire' alongside a series of exposes of the country's super-wealthy elite

Russia state media watchdog has blocked the investigative news website ProektComes after it published alleged details of Putin's former mistress and love childThe site was previously labelled a 'foreign agent' and its founder an 'undesirable'Ministry of Justice claimed the website posted 'threat' to Russia, President Putin Read more »

Five charts that show how the Budget makes you poorer

Chancellor Rishi Sunak’s high-spending Budget will leave millions of Britons worse off, according to new forecasts. © Provided by The Telegraph illo The Chancellor has unveiled £150bn of spending that ... Read more »

Tiny baby pterosaurs — or 'flaplings' — could fly from BIRTH and overshadowed their smaller adult rivals, study finds

Small-sized adult pterosaurs were common in the Early Cretaceous PeriodTheir rarity in the Late Cretaceous has long been blamed on the rise of birdsExperts led from the University of Portsmouth now believe a different hypothesisThey studied pterosaurs fossils found in the Aferdou N'Chaft mine in Morocco They found small jaw fragments that microanalysis has shown to be from babiesThese so-called flaplings of giant pterosaurs outcompeted the smaller adults  Read more »

Xbox series X stock - live: Box restock is available now – how to get the console

LIVE – Updated at 12:54 © iStock/The Independent xbox IB2 Update: The Xbox series X is in stock at Box as part of a premium bundle of other gaming accessories. ... Read more »

Video: Moment maskless woman racially abuses Bolt taxi driver calling him a 'f*****ing P**i' before getting out and kicking his car

Read more »

You can now request Google to remove your images from search result

Google has rolled out important updates that will be helpful in curbing online harassment. Now you can request Google to remove your images from the search results. If you google ... Read more »

3 Easy, Traditional Diwali Recipes You Can Make Under 30 Minutes

Diwali is just around the corner and the celebrations are incomplete without some homemade, traditional sweets. Agree? After all, festive season is all about getting together with our friends and ... Read more »

Janitor turned cosmetic manufacturer receives Science & Technology Award

© Provided by Good News Pilipinas The success story of Henry and Apple Raca with the C&H Cosmetic Industry is hailed as the best story of a business adopting S&T ... Read more »

Sir Patrick Vallance: Small changes will help tackle climate crisis

© PA Wire Coronavirus – Mon May 10, 2021 Small changes such as eating less meat and flying less are “part of the solution” to tackling the climate crisis, the ... Read more »

India's growing appetite for on-demand warehousing

© Provided by Business Today India’s growing appetite for on-demand warehousing The COVID-19 pandemic has spurred the emergence of a vibrant ‘on-demand’ economy globally and in India. In layman’s terms, ... Read more »

Public intervene as man 'tries to drag woman off street' in Rochdale

Police say it was an "extremely distressing incident" for the woman, and arrest a 41-year-old man on suspicion of kidnap and sexual assault. Read more »

I still breastfeed my toddler, he's always burrowing around my boobs for a drink, I'm sick of people saying it's ‘nasty'

A MUM looking for advice on how to stop breastfeeding her two-and-a-half-year-old son was trolled by users online. The woman called Kaylee posted a video to her TikTok account, cupidkayleee, ... Read more »

Radio One star Adele Roberts shares cancer battle update from her hospital bed after surgery to remove bowel

RADIO One star Adele Roberts has shared an update on her cancer battle after surgery to remove part of her bowel. The former Big Brother star first revealed her devastating health ... Read more »

Delhi Peeps! Now Enjoy World-Class 'Executive Lounge' at New Delhi Railway Station | See Pics

© Nivedita R | Travel Staff Delhi Peeps Can Rejoice as New Delhi Railway Station Offers Airport-Like Facilities (Image: IANS) New Delhi: The New Delhi railway station is now offering ... Read more »

Biden delays meeting with Pope Francis over spending bill crisis

President Joe Biden had pushed his trip to the Vatican back as he continues to deal with the push back on his reconciliation bill. REUTERS/Jonathan Ernst Devout Roman Catholic President ... Read more »

Cosplayer Alyson Tabbitha transforms into Johnny Depp, Wonder Woman with makeup

Take it from a master of disguise — costumes don’t have to be spooky to blow people’s minds. A Florida-based artist and cosplayer who goes by the name Alyson Tabbitha ... Read more »

Airtel warns about KYC frauds after customer gets duped by fraudster claiming to be Airtel executive

Airtel has warned its customers again about KYC and OTP frauds in which fraudsters pose as executives and try to get access to their bank accounts. Airtel noted that recently ... Read more »

5 things spotted from Man Utd training including Ole Gunnar Solskjaer's role with players

After all the speculation, conjecture and furore, Manchester United’s under-fire players and staff have returned to the daily task of preparing for Premier League action. Now four days removed from ... Read more »

Biden Tax Plan Gets Shredded Down in Battle to Raise Revenue

(Bloomberg) — President Joe Biden’s tax agenda, crafted by experts who worked on the proposals for years and wrote books about their ideas, is getting a wholesale revamp as Democrats ... Read more »

New dads are 'losers' if they take 6 months paternity leave, prominent venture capitalist says

A prominent venture capitalist is under fire for calling new dads “losers” if they take months of paternity leave. © CNN Palantir cofounder Joe Lonsdale responded to a tweet Wednesday ... Read more »

Tell us: have you made all the preparations you need to for Christmas?

© Provided by The Guardian Photograph: Geoffrey Swaine/Rex/Shutterstock Have you already arranged everything you need for Christmas this year? We would like to hear from people who have already finished ... Read more »

Hospitalised Czech president shown in video as his office counters critics

PRAGUE (Reuters) – Aides to Czech President Milos Zeman on Thursday showed a video of him signing a decree to convene a new parliament while in hospital a week ago, ... Read more »

Cis lesbians condemn BBC for ‘transphobic campaign' after shameless attack on trans women

Prominent cis lesbians have accused the BBC of amplifying a “transphobic campaign” and contributing to a “baseless moral panic”. The criticism comes after the BBC published an article, “We’re being ... Read more »

UK teen sentenced to 35 years for devil-pact double murder

© Reuters/METROPOLITAN POLICE Handout picture of Danyal Hussein in custody LONDON (Reuters) – A British teenager who murdered two sisters in a London park as part of a pact he ... Read more »

Mumbai cruise drugs case: Bombay HC grants bail to Aryan Khan, Arbaaz Merchant and Munmun Dhamecha

© Provided by Firstpost Mumbai cruise drugs case: Bombay HC grants bail to Aryan Khan, Arbaaz Merchant and Munmun Dhamecha The wait for bail in the Mumbai cruise drugs case ... Read more »

Josh Cavallo is the first openly gay footballer, here are other sports stars who are proud LGBTQ+

Josh Cavallo has made history as the first openly gay footballer. The 27 year old Australian sportsman plays for Adelaide United based in his home country. He shared his story ... Read more »

Pakistan Islamist group vows to march on capital after clashes with police

A general view of a highway with shipping containers blocking the entry point to stop the protest rally of the banned Islamist political party Tehrik-e-Labaik Pakistan, in Islamabad By Mubasher ... Read more »

When Rajinikanth's best friend Raj Bahadur encouraged him to join films. On Throwback Thursday

Rajinikanth’s throwback photo with his best friend Raj Bahadur. For those who have followed Rajinikanth over the years, the very mention of his friend Raj Bahadur will take us back ... Read more »

BBC to air new Freddie Mercury documentary

© Bang Showbiz Freddie Mercury The BBC is to air a new documentary about the final years of Freddie Mercury’s life. ‘Freddie Mercury: The Final Act’ will be on BBC ... Read more »

Pakistan Islamists clash with police over French cartoons

The clash broke out at a rally of the banned Tehrik-e-Labaik Pakistan (TLP) on a highway in Sheikhupura, just outside Lahore, as the group prepared to march on the capital ... Read more »

Anushka Sharma to Alia Bhatt, Bollywood nails Badshah's Jugnu challenge. What is it?

Alia Bhatt and Anushka Sharma (extreme right) have tried Badshah’s trend. Bollywood celebrities love following the ongoing trends on social media. They never miss a chance to try out the ... Read more »

5 inmates at Silchar Central Jail in Assam test positive for HIV

© Provided by Hindustan Times A file photo of the Central Jail in Silchar, Assam. Five inmates recently tested HIV positive at the Silchar Central Jail. (HT photo/ File) Five ... Read more »

Millions to be worse off due to rising taxes and inflation, says IFS

Millions will be left worse off as low-income households face “real pain” due to Rishi Sunak hiking taxes as costs rise, a leading economic think tank has warned. The Institute ... Read more »

Italiens Regierung beschliesst mehr Corona-Wiederaufbaumassnahmen

© Keystone/LaPresse via ZUMA Press/Roberto Monaldo Italiens Regierung will mit einem Dekret und einer Gesetzesvorlage seinen Finanzierungszielen im Hinblick auf den Corona-Wiederaufbauplan in diesem Jahr näher kommen. Der Ministerrat unter ... Read more »

'Privacy Fundamental Right of Citizens': Hyderabad Police Under Fire for Checking Commuters' WhatsApp Chats on Drugs

© Provided by News18 ‘Privacy Fundamental Right of Citizens’: Hyderabad Police Under Fire for Checking Commuters’ WhatsApp Chats on Drugs The Hyderabad Police’s anti-drug drive in the city came under ... Read more »

UK complies with EU trade deal, Johnson's spokesman says

A British trawler Cornelis Gert Jan is seen in Le Havre LONDON (Reuters) –Britain is fully in compliance with the rules of its post-Brexit trade deal with the European Union, ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic