Since late 2021, households across the UK have been facing a sharp increase in their home expenditures, in some cases to an impossible extent. Struggling to make ends meet has been normality for much of the UK for some time now, but in the last few months, it has only become more difficult. Now, families and individuals across the country are faced with the costs of paying for petrol, food and even healthcare rising – but perhaps nothing has become quite as much a struggle as powering the home. Those who were already struggling are now facing even harder times, and some are experiencing it for the very first time. According to the Inflation Nation report by the Yorkshire Building Society, nearly three-quarters of people think that the cost of living crisis is going to have a negative impact on them.
What has caused the cost of living crisis?
Defining what has caused the cost of living crisis is not easy, and in fact, there have been multiple factors that have contributed to the crisis occurring. We have certainly heard more about the crisis since the Ukraine conflict has begun, and while this has made a significant difference to the cost of living, there are lots of others things that have affected it too.
The COVID-19 pandemic perhaps did not start the crisis, but it certainly impacted our ability to cope with it, and therefore is one of the key factors here; the effects of which have been extremely detrimental to the UK’s economy. The obvious effects of the pandemic are, of course, on people’s health, but there have been significant social and economic effects as well. The major effects on the economy are a result of the nationwide furlough scheme combined with the extreme detriment that has come to some of the country’s biggest industries, from transport to hospitality to tourism. The UK’s economy was left in a precarious state, which meant we weren’t able to deal with the crisis as well.
More specifically to the cost of living crisis and energy, there have been several factors at play in the steep increase in energy bills across the UK. For one, the whole world saw an uncharacteristically cold winter in 2020, going into 2021, and this meant that energy was far more in demand internationally, impacting its price. Due to this, energy costs have been rising for quite some time now. Furthermore, as the world began to open up once more after the pandemic, many of the industries that had been forced to shut down had the chance to reopen once more. This created an even bigger demand for energy, particularly due to manufacturing industries. Combine these with more than 30 UK energy suppliers going bust due to managing costs of customers without homes, and it is no surprise that energy has become so expensive.
What has been the effect on energy bills?
Increasing energy bills has become one of the most concerning parts of the cost of living crisis, affecting millions of people and their ability to pay for gas and electricity. The increased cost of bills is a result of Ofgem’s new energy price cap, which came into effect on April 1st, and will see UK households paying far more for their energy bills per year. This is going to have a massively detrimental effect on UK households as their weekly, monthly and yearly expenditures continue to increase with their bills.
The reason for this sharp increase in energy bills is due to the cost of wholesale gas prices increasing. They have been increasing ever since 2021, due to the factors discussed above, but since the Russia – Ukraine conflict has begun, the prices have started increasing at a far faster rate due to Russia being one of the world’s main gas suppliers. This is going to make this coming winter one of the hardest ones for those in the UK to heat their homes.
What next?
We are now in a time of experts evaluating just what this energy crisis is going to mean for the cost of everything else that we regularly consume. Over the coming years, it is predicted that we may see increases in the prices of anything from salt to glass to tomatoes, simply due to the energy that is required to manufacture and grow such items. There are also predictions that gas prices may fall again over the next year or so, and therefore inflation may do the same. However, for the situation that we currently find ourselves in, the cost of energy may seem unbearable. That’s where we can help – check out the rest of our site for everything you need to know to save energy and bring the costs of your bills down.