Inflation Sees Declining Living Standards for Britons
Six million British households are set to experience power cuts as the Government plans electricity rationing this winter. Government modelling of a ‘reasonable’ worst case scenario where Russia cuts off all gas supplies would see gas-fired power stations limited. The end result would be outages during the morning and evening peaks. Coal-fired power stations tabled to close later this year have had their lives extended, however the UK government maintains their commitment to end the use of coal power by October 2024. Undoubtedly, energy security has made its way into the centre of geo-political considerations.
The warnings of electricity rationing come as inflation both in England and the world continues to ramp up and stagflation and recession looms. Recession fears are reverberating across the globe with the World Bank forecasting the sharpest draw down in more than 80 years. The combination of rapidly diminishing profit margins and inflation, as we covered in yesterday’s news, are eating away at ordinary citizens’ living standards.
Yesterday the OECD joined the World Bank in voicing very serious concern around stagflation having literally doubling their global inflation forecast to 9% this year and reducing the growth forecast by a third to 3%, still above the World Bank’s 49% reduction to 2.9%. From ABC News:
“It said the inflationary pressures globally would likely be stronger and longer lasting than expected, making the world's economic recovery more complicated and fraught.”
In the UK, food prices in particular have galloped upwards. The Office for National Statistics scraped supermarket data from the web to capture the price changes of everyday supermarket items from April 2021 to 2022. Pasta jumped just under 50%, followed by crisps, bread, beef mince, rice and biscuits all between 17-18%.
With the UK sitting at approximately 9% annual inflation, they are one of the many nations in danger of stagflation. Edging towards 10% annual currency devaluation, Britain is far from the highest, though a long way from the lowest.
Britons struggling to make ends meet are turning to food banks, with the numbers of people using food banks and charities rising from 9% in March 2021 to 15% in March 2022. According to the Food Standards Agency (FSA), three in four Britons now have ‘major future concerns’ about the cost of food. The FSA is now working urgently with food banks to guarantee supply for people in need. The same survey found that one in five UK residents are skipping at least one meal per day, or cutting down on portion sizes. With obesity rates almost quadrupling over the last 25 years, reducing dietary intake may not be the worst of the recession for those in the British Isles. The NHS estimated in 2021 that just over 60% of Britons being classed as ‘overweight’ or ‘obese’. Ironically, missing the odd meal due to a lack of money may, literally, save them a few pounds.