Brexit-induced Inflation leaves UK Households over £800 worse off
New research suggests that since the UK voted to leave the European Union last June, a combination of rising inflation and stagnating wages have left people over £800 worse off over the course of a year.
The study, carried out by the Centre for Economic Performance, found that the average household is spending an additional £404 each year due to rising living costs, whilst also losing the equivalent of a week’s pay as wages fail to keep up. Dr Thomas Sampson, who led the study, noted that Scotland, Wales, and especially Northern Ireland were the worst affected. London households appear to have been least influenced by these changes.
Soaring Food Prices
Imported products have had their prices hiked the most, including everyday essentials such as bread, milk, cheese, tea, coffee, and cereals. The rate of inflation for food and non-alcoholic drinks stood at 4.1% as of October 2017. This rise has sparked concern that some of the poorest families will struggle to afford a healthy, balanced diet. The Food Foundation, a charity aiming to improve nutrition in the UK, predicted earlier this year that a no-deal Brexit scenario could force the poorest 10% of the population to spend around 50% of their entire food and drink budget just to meet the recommended dietary target of five portions of fruit and vegetables each day. Less than 10% of secondary school children currently eat the recommended amount of fruit and veg and, with prices on the rise, this high rate of poor nutrition could be set to continue.
The rise in the use of food banks has also been a concerning trend of recent years, and the demand for them is not slowing. One prominent network of foodbanks, the Russell Trust, distributed 586,907 emergency food parcels between April and September. Significantly, when recipients chose to share the reason for needing this emergency help, 8.29% – or around 48,655 people – cited problem debt as the reason they could not afford food.
According to the Food Foundation, one in ten children are currently living with adults who are experiencing ‘severe food insecurity’. This means that 10% of UK children are considered to be living in food poverty – a much higher rate than in other European countries, where the average is only 4%. Many households are resorting to credit in order to pay for essentials. Citizens Advice found that the average age of people seeking help with debt has been decreasing in recent months, suggesting that young people are among the worst affected by Brexit-induced inflation.
Debt for Young People and Families
The problem of rising food costs seems to have hit young mothers particularly hard. A survey carried out by the Young Women’s Trust in September revealed that 46% of mothers under the age of 25 in the UK skip proper meals themselves to ensure money is available to properly feed their children. Mothers in this age range are particularly badly affected by the price hikes since they are not entitled to the National Living Wage, or the full level of benefits support which parents over the age of 25 are eligible for.
For young people overall, the picture seems similarly bleak. A quarter of people aged 18-30 in England and Wales are in constant debt, according to another Young Women’s Trust Survey. Nearly half of respondents reported borrowing money, working extra hours, or even skipping meals to get by month to month. 18% borrowed or were given money from their family, but 20% were forced to use an overdraft, and a further 14% borrowed via a credit card. According to Dr Carole Easton OBE, young women have been disproportionately affected by the rising costs of living. This is likely caused by the continued gender pay gap, and the fact that women occupy more part-time and low-paid roles than men. This is partly due to women continuing to take on the bulk of childcare. For this reason, they are more likely to require flexible working hours. Citizens Advice have also revealed that people under the age of 35 seeking their advice are much more likely than their older counterparts to be struggling with high-interest credit, such as payday loans and credit cards.
Beating the Pinch
The rising cost of basic items has clearly hit many UK residents hard, and addressing the problem will be a challenge. Anna Taylor, Executive Director of the Food Foundation, suggests that the price of healthy foods could be brought under control by increasing harvests of fruit and veg grown in the UK. By reducing the country’s dependence on imported crops, the price which consumers pay in the supermarket could ultimately be reduced. Increased wages, especially in the public sector, where pay has been floundering since the financial crisis, could also go a long way towards easing the strain which many households are facing.
If you need more information about the options available to you in dealing with your debt, you can always speak confidentially with one of our friendly advisors on 0808 2085 198.