What the cost of living crisis means for your mortgage, savings, retirement, wages and prices

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While most of the UK is still reeling from the devastating consequences of the pandemic, the end of the year is set to be bleak, as 18 months of coronavirus sparks higher inflation, cuts in benefits, a chaos in food prices and rising energy bills.

Still others accused the government of exacerbating the crisis with budgetary decisions taken over the past decade.

Shadow Chief Treasury Secretary Bridget Phillipson blamed the government, saying: “Working families face sudden pressure on living standards on a scale not seen in a generation.

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“Incomes go down, prices go up, especially energy prices, taxes go up, rents go up, childcare costs go up, fuel costs go up, rail fares go up.

“The British people are facing this not just by chance, but because of the choices made by Conservative governments this year, last year and over the past 10 years. It was not a tragic and unpredictable series of unfortunate accidents that brought us here. These are choices that this government has made.

The Organization for Economic Co-operation and Development believes the cost of living crisis is set to last well beyond winter, with the comment coming after the warning from former Brexit Secretary David Davis.



Document photo released by the British Parliament of Chancellor of the Exchequer Rishi Sunak handing over his budget to the House of Commons in London.

The OECD predicts that inflation could reach 3.1% next year, a jump of 1.4 percentage points from its forecast in May.

David Davis said, “From the perspective of what you might think of as the new Tory voter, the plumber, the bricklayer, the truck driver, there is going to be a cost of living crisis. “

However, despite all this, Prime Minister Boris Johnson last night denied a winter of worry even though universal credit is already cut and national insurance increased.

The Prime Minister said: “I think this is a short-term problem caused by energy issues, gas price spikes and, like many other supply issues that we see, there are including food, are caused by the revival of the global economy. after a long time in this suspended animation caused by Covid.

However, Business Secretary Kwasi Kwarteng admitted that next month’s CU reduction and price hikes were causing “a tough situation, it could be a very tough winter.”

The Bank of England is meeting today (September 23) on whether to raise interest rates, which could be another devastating blow to millions of people in the country.

So how exactly will the cost of living crisis affect you?



House prices are still on the rise in Leeds – but hardly

Mortgages

Borrowers have taken advantage of the current low interest rates and despite rising inflation, most experts do not expect these rates to rise.

Among the many jobs at the Bank of England, they aim to keep inflation at around 2% using methods such as increasing its base rate, which is used to influence broader borrowing costs.

Economists believe he will keep the rate at its all-time high of 0.1%.

Prices in stores

There has been a long period of deflation, but in-store price deflation will ease from 1.2% to 0.8% in August.

The prices of food and some non-food items have increased due to shortages, the trucker crisis and shipping costs.



Chancellor of the Exchequer Rishi Sunak outside 11 Downing Street, London, before heading to the House of Commons to present his budget
Chancellor of the Exchequer Rishi Sunak outside 11 Downing Street, London, before heading to the House of Commons to present his budget

Public finances

Higher inflation is bad news for the country’s finances.

Yesterday figures from the Office for National Statistics showed how rising inflation added £ 2.9bn in interest payments last month.

The country’s debt mountain stands at £ 2.2 trillion, so any increase in borrowing costs caused by higher inflation in the coming months will be a huge problem for Chancellor Rishi Sunak.

The United Kingdom is in an energy crisis following the price of gas which has exploded in recent weeks.

Many energy suppliers are bankrupt, prompting warnings of food shortages in UK supermarkets.

Households are warned that anyone who enters cheap fixed energy deals could face huge price increases, even on the cheapest tariffs. To avoid a possible rise in energy bill prices, customers can:

  • Stick to the price cap for six months, as prices could potentially drop if the energy market stabilizes.
  • Upgrade to the cheapest fixed offer of one or two years, but you’ll have to act quickly – see here for switching.

Here are some of the comparison sites suggested by Ofgem:

You can also try Take care of my bills and Confus.com.

Pensions

Next April’s increase in the state pension will be based on this month’s inflation.

If the Conservatives had stuck to their triple lock promise, the state pension would have been much higher because it would have increased based on average salary.

Private sector defined benefit pensions will not be affected since the annual increase is capped at 5%.

Those who have a defined contribution pension because, to keep pace with the rising cost of living, they will have to take more.

Wages

Figures from the Office for National Statistics show wages rose 8.8% in the three months to June, compared to the same period a year earlier.

This is believed to be due to the number of workers on leave or reduced hours last year.

Employees will be able to use inflation and labor shortages to demand larger pay increases.



Boris Johnson says canceling Christmas again is not
Boris Johnson says canceling Christmas again is ‘not the plan at all’

Savers

Although savings rates are on the rise, it is still almost impossible to find rates that beat or match inflation.

If inflation continues to rise, but interest rates don’t, savers will pay more for the cost of living but no longer earn their money.

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