With petrol reaching record-high prices, the pressure is piling on for the UK public. Sky-rocketing inflation has caused the bulk of the country’s cost of living crisis, which was already being driven by higher energy prices and tax rises, and further impacted by the crisis in Ukraine.
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In December, inflation (as measured by the official consumer prices index (CPI)) hit 5.4%, the highest rate since March 1992. Experts have warned that living costs are expected to rise further still – some economists predict that inflation could continue to rise and remain higher than usual for much longer than expected.
Renewed demand for goods and services
Increased inflation is a reflection of the renewed demand for goods and services after the lockdown, when prices fell aggressively as well as the impact from supply chain disruption after COVID-19 disrupted factory production and global trade.
Economies all around the globe are battling similar issues, but unfortunately, the UK has the additional disruption of Brexit to contend with. Luckily, most economists predict that inflation will ease once COVID disruption subsides.
Petrol prices on the rise
The coronavirus has long been the cause the cost of living issues, but the current geopolitical tensions are causing even more problems when it comes to petrol as the Russian invasion of Ukraine has fueled profiteering from retailers. As Russia is one of the world’s top oil producers, the increased prices are already affecting households all across the country.
Not only are motorists affected by these higher fuel prices, but businesses who rely on transporting goods will most likely need to pass along these increased costs to the consumer in the form of increased fuel surcharges. While most businesses may try to absorb these costs, small businesses with less wiggle room will undoubtedly be the ones most affected.
These increased fuel prices will most likely worsen the current cost of living crisis. Inflation is already at a 30-year high and is predicted to reach 8% by April.
To ensure your financial situation isn’t affected by the cost of living crisis, check in with your trusted financial adviser for personalised advice according to your unique circumstances. Get in touch today.