uK inflation – which goods and services have risen most in price?

raj & Ted

Over the past few years, the UK has seen a steady rise in prices across various sectors. This includes food, transport, and utility bills. While inflation is an unavoidable economic phenomenon, some factors have contributed to the sharp increase in prices that we have witnessed recently.

One of the primary causes of food inflation in the UK is the fluctuations in global food prices mainly due to the volatility in commodity prices. The UK imports a significant proportion of its food, making it vulnerable to global price changes. Additionally, natural disasters such as droughts, floods and storms can affect the supply and demand chains, leading to higher prices.

in recent years, leading to higher prices. Additionally, environmental regulations and taxes imposed on the transport sector by the government play a role in the increased prices. However this is stabilizing as oil prices are falling.

Finally, utility inflation is mainly due to the rising costs of electricity and gas production. As coal powered plants are phased out, renewable energy sources such as wind and solar power become increasingly expensive to operate, leading to higher electricity prices. Additionally, infrastructure investment, maintenance costs, and government policies also contribute to rising utility bills.

rising import prices for food will only increase our budget deficit as we import 46% of our food. This will only increase debt which means higher interest payments, which decrease our government spending which limits growth.

Another contributing factor to food inflation is the impact of Brexit on the UK’s food industry. The uncertainty around Brexit negotiations has led to a weaker pound, making it more expensive for UK-based companies to import goods. This, coupled with potential border delays, has led to food shortages like we are currently seeing in fruit and vegetables, in turn, driving prices up. This is made worse by recent droughts that have limited the supply of peppers, tomatoes and cucumbers.

Transport inflation, on the other hand, is primarily caused by rising fuel prices. The cost of oil, which is used to fuel most modes of transportation, has been volatile

The effects of inflation on these items which are necessary for our survival are great. Firstly with food prices increasing by 18% there will be large effects for the whole population. With the median income only increasing by £623 it means that the percent of income spent on food has risen sharply. This did affect the lower income households the most, increasing the level of poverty and food insecurity, affecting the most vulnerable groups of society the worst such as children and the elderly. The high prices of food might force people to switch to cheaper foods that are worse for health which can have a long-term negative effect on wellbeing. For the UK economy this will also have an adverse effect,

Further rising prices in transport will also affect the household budget and will lead to a worse standard of living and consumption which can further inhibit growth in the economy. Further increases in the cost to travel will mean people are less inclined to go to work and might work from home. This is less efficient and will decrease the productivity of the country and can decrease output. Lastly the effect of increasing prices of utilities will further affect the standard of living as, there will be less income to spend on luxury items and it could mean colder homes which has a negative effect on health. This will again have a larger impact on lower income households with fixed incomes as they can’t adapt to the rising prices and have large opportunity costs. However, it will make people be more efficient in how they use electricity which means better habits as electricity isn’t being wasted leading to better environmental sustainability. This is the only positive in otherwise a bleak reality.