The ongoing cost-of-living crisis

3 February 2023  |   6 minutes read
Lady at a food bank

With the UK continuing to face a cost-of-living crisis, we look at the effect this is having on individuals, communities, and the wider society, and what is being done to tackle the crisis.

Overview of the cost-of-living crisis

The current UK cost-of-living crisis began in late 2021. The war in Ukraine pushed up the prices of wholesale gas and food (particularly grain), leading to higher prices at petrol stations and supermarkets worldwide.

In the UK, we’ve seen additional price increases due to supply-chain bottlenecks resulting from Brexit. This compounded to drive inflation to a 41-year high as the Consumer Prices Index (CPI) rose by 11.1% in the 12 months to October 2022, up from 10.1% in September 2022.

Although wages rose in the same period (+5.7% in the three months to September 2022, compared to the same period in 2021), they haven’t kept up with prices. Housing and energy costs in particular have risen 26.6% since October 2021. So, it comes as no surprise that living standards have been negatively impacted. In fact, the charity Shelter has dubbed this ‘the worst cost of living crisis in the UK since the 1950s’.

What effect is the cost-of-living crisis having on individuals and households?

Analysis shows that the cost-of-living crisis is impacting lower-income families disproportionately. As these households spend more of their income on fuel and food, the impact of rising inflation is magnified. With outgoings outstripping incomes, many are struggling to pay bills and buy the food they need – The Guardian.

  • Almost 2.5 million renters are now behind or constantly struggling to pay their rent – an increase of 45% since April 2022.
  • Forty percent of people surveyed by The Trussell Trust who are on universal credit say they are having to skip meals.
  • More than a third of those surveyed have fallen into debt in the last three months as the result of rising prices.

What is being done to tackle the cost-of-living crisis?

In November 2022, The Bank of England increased their interest rate to 3% in an effort to bring down inflation rates. However, this has also increased payments for the 2.2 million people on variable-rate mortgages.

This has also pushed up the price of new mortgages and loans. And inflation rates are still rising higher than interest rates, meaning anyone with savings will see their funds eroding.

In May 2022, the government announced they had put together a package of support to tackle rising energy bills. And a number of government or charitable grants, loans and other funds are available to people who are struggling. These funds are often distributed via vouchers or bank transfers to cover emergency purchases and payments like food shopping or energy bills – Shelter.

Local authorities and agencies can now work with Soldo

Soldo has been named as a payment solutions supplier for Crown Commercial Services (CCS) for the pre-paid framework, Lot 2. That means that entities like local authorities can now distribute pre-paid Soldo cards to the most vulnerable in society as an alternative to bank transfers and food vouchers.

Cards can be issued to residents to distribute social care benefits or emergency funds quickly, helping people cover essential purchases. While Soldo’s software allows local authority or agency teams to track and report on spending and set funds aside for different individuals, projects, or organisations.

Find out more about how Soldo is working as a supplier to Crown Commercial Services

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