Three Commodities That Are Rapidly Rising in Price
Commodity price rises are accelerating in the UK, owing to a variety of factors including the Russia-Ukraine war, Brexit, and the Covid-19 pandemic. Come read our blog to find out which commodities' prices have risen.
Commodity price increases are outpacing wage increases in the UK. In April 2022, inflation in the UK reached 9%, the highest level in 40 years. As a result, families are facing rises to outgoings that are impossible to accommodate, given their salaries.
What Commodities Have Increased in Price?
Energy prices are probably the greatest worry for UK households right now. On April 1st, Ofgem, the market regulator, set a new price cap, making the average UK household pay £1,971 a year for their energy bills. This represents an increase of 54% from the previous year. What’s more concerning is that bills are set to rise again in October when the next price cap change occurs.
According to the Inflation Nation report, the rapidly rising energy costs will push the average weekly household spend to around £705 over the next two years. With real-time earnings predicted to rise to just £680 a week on average, households will be left £100 short each month.
Petrol and diesel prices have also skyrocketed in the UK. According to figures from May, petrol and diesel prices have reached record highs. The average cost of one liter of petrol reached 167.6p in May, and the average cost of diesel also broke previous records as it reached 180p per liter.
The third commodity that is most rapidly rising in price is groceries. Food prices have been climbing for many months, with the Bank of England governor Andrew Bailey warning of a forthcoming “apocalyptic” food crisis in May. Some food items face more significant price hikes than others. Milk, for example, is predicted to rise in price by 50% compared to prices one year ago. Among foods that will be the worst hit include dairy, meat and poultry, pasta, and sugar.
Is the UK Experiencing a Cost-Of-Living Crisis?
The Office for National Statistics (ONS) has reported that almost a quarter of adults (23%) felt that it was either “very difficult” or “difficult” to pay their household bills this March compared to the same month in 2021. Experts predict that the number of households origin in "fuel stress” (paying more than 10% of their income on energy bills) will double to 5 million due to the latest price hikes.
Most adults in the UK (4 out of five) are worried about the cost of living increase and their ability to afford the basics. Research shows that those on lower wages are hardest hit. There is thus much speculation on whether the UK is entering a cost-of-living crisis. For many, the rising cost of living is spiraling out of control, and there is little evidence that the government plans to provide any relief.
There is no sure and simple way out of the UK's rapid rise in living costs. The causes are numerous and complex, and those in power are unsure how to effectively address the situation. Taxation on certain sectors and increases in welfare benefits may provide some relief, but the path out of inflation and continued commodity price increases will almost certainly necessitate multiple strategies as part of a long-term strategy.
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