What is causing price rises?

In the UK, we have two main causes that are driving up the cost of living; energy price rises and inflation.

Lets start with the latter;

Inflation is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country. But it can also be more narrowly calculated—for certain goods, such as food, or for services, such as a haircut, for example. Whatever the context, inflation represents how much more expensive the relevant set of goods and/or services has become over a certain period, most commonly a year.

And now, the energy price rises.

There is a bit of a perfect storm occurring with energy prices. Whilst there is not a global shortage of gas, the UK doesn’t have a lot of storage capacity for it, thus we tend to rely on LNG imports, etc on a more frequent basis. Other countries are scrambling to make sure their supply is stable, which has pushed up prices.

There was also a fire at a major electricity substation that supplies electricity to the UK. And the companies that couldn’t afford these price changes have gone bust, which has decreased competition.

Also, companies will have one eye on the price cap changing in April – it is, at this stage, certainly not anticipated that it will fall.

So, what does this mean for you?

Put simply, your purchasing power has decreased. What you put in your shopping trolley, the fuel for your car, the electricity to keep your lights on, it all costs more than it did a year ago.

What can be done?

For now, not a lot. There is unlikely to be a solution to all of this anytime soon. What you can do is look to see if you are getting the best out of what you are paying for. For instance, could you be making savings on your mortgage, or changing the way you shop.

For a more in-depth financial review, the team at MAP Link can help. We have a panel of financial experts who can help you cut your outgoings, reclaim money you are owed and plan for the future.

Email our team on info@map-link.co.uk or call 01292 317214.