The cost of living has been rising significantly in recent years, which has put a heavy burden on people’s finances. Growing costs for everything from housing and schooling to daily needs and healthcare have put both people and families in a difficult financial position. This article examines the numerous causes of the rising cost of living as well as the significant impact it has on people’s financial security.
Housing And Medical Costs
The cost of housing and other accommodations is one of the main factors driving up the cost of living. Finding inexpensive solutions has become more challenging since housing and rental rates have skyrocketed in many cities and areas. There is an affordability dilemma as a result of rising property values, tight supply, and high demand, which forces people to devote a sizable amount of their income to housing expenses.
The rising expense of healthcare is putting a strain on people’s finances and adding to their financial burden. Many people and families now have limited access to high-quality healthcare due to rising health insurance premiums, copayments, and deductibles. Unexpected medical costs can swiftly drain finances and put people in danger of going bankrupt.
Rising Prices And Essential Items
Everyday expenses and necessities become more expensive due to inflation, which is a gradual rise in the general level of prices for goods and services. Increasing costs for transportation, utilities, food, fuel, and other needs have a direct effect on people’s finances.
It can be difficult for low-wage workers and those on fixed incomes to keep up with the rising costs, which lowers their purchasing power and lowers their quality of life.
In the year to January 2024, overall food prices rose by 7% in the United Kingdom. In 2023, the European nation’s Competition and Markets Authority (CMA) highlighted the issue of “greedflation” among retailers that are thought to be hiking prices at a greater rate than wholesale rises.
As per a report in The Conversation, the above factors are helping to fuel a food black market in the British mainland, a problem that has serious implications for businesses, apart from causing the product shortages consumers see on supermarket shelves.
The British Standards Institution too agreed with the CMA, by stating that 22% of all thefts from lorries and warehouses in 2023 were of food and drink products. The stolen goods were then redistributed into illegitimate supply chains and sold on within days.
“This is an increase from 17% in 2022, as the black market gets bigger. Black market operators often target products that are easily resold, including food, toys, white goods and perfumes, as opposed to more expensive products. Last year, for example, an HGV containing £50,000 of cheese was stolen from a motorway service station near Worcester,” The Conversation reported further.
“Reasons for turning to the black market for food are multilayered. But often, it is fuelled by those who are hit hard by the cost of living. And it may be that buyers can justify it because, as they see it, they are not shoplifting themselves,” it reported further.
Pay Stagnation, Diminished And Unequal Income
For a large number of people, salaries have not increased in line with the rising cost of living. The financial hardship brought on by rising expenses is made worse by stagnant salaries and income inequality. The inability of individuals to save, invest, and establish financial security results in a wider wealth disparity and the continuation of socioeconomic inequality.
People have less money available for savings, investments, and leisure activities since a large amount of their income is allocated to cover necessities. This makes it more difficult for them to make long-term plans and meet their financial objectives.
The escalating expense of living has a significant effect on people’s finances, impacting their general well-being and financial stability in multiple ways.
We have to take the UK example here to justify our point, since the country has been the worst affected in the world due to the “Cost-of-Living Crisis.”
A March 2024 survey from the Health Shield Friendly Society has revealed that many British workers are still struggling on the financial front, with many of them reportedly taking drastic steps to save money.
The survey of full and part-time workers across the British mainland saw two-thirds (66%) expressing worries about the cost of living crisis. The tally has increased over the last 12 months, with six in ten (61%) saying they are now more worried about it compared to a year ago, with only 11% saying they are less worried. Almost half (48%) say it has impacted their ability to do their job.
Just over half have their living costs increasing compared to 2023, with further financial pressures set to continue. Real household disposable income in the United Kingdom fell by 2.2% in the 2022/23 financial year, and will fall by 0.8% in 2023/24, and by 0.5% in 2024/25.
The Health Shield Friendly Society survey also shows money worries getting rife across the workforce with 74% stating they worry about money at least once a week. The main financial concerns are rising utility prices (58%), having to put plans on hold (55%) and increasing food prices (50%).
To combat these ongoing financial pressures, employees are taking the following steps: purchasing cheaper food (82%), using savings or credit cards (70%) and cancelling holidays (61%). Alarmingly, nearly 4 in 10 (37%) say they have skipped meals.
Those earning under 25,000 pound a year and those earning 25,000-40,000 pound a year are the most worried (69% and 68% respectively). This compares to higher earners of 40,000–60,000 pound a year and 60,000 pound plus being less worried (55% and 54%). However, the employees (57%) earning over 60,000 pound a year are also worried about how the cost of living crisis will impact their ability to do their job.
Lower salaried employees are the most worried about rising food prices. More than five in ten (53%) employees who earn under 25,000 pound a year said this was the case, closely followed by 50% of those earning 25,000–40,000 pound a year. This compares to those who earn 40,000–60,000 pound a year, who are the least concerned, with just 36% saying this was the case.
More than six in ten (61%) of those earning under 25,000 pound a year are the most worried about paying high utility bills, closely followed by those earning 25,000–40,000 pound a year (60%), compared to 44% of those who earn 40,000–60,000 pound who were the least concerned.
Loans And Increasing Debt
The cost of pursuing an education has increased over time, for both college and high school students. Students and their families are under a great deal of financial strain due to rising tuition costs and the weight of student loans. A lot of graduates have large debt loads, which makes it difficult for them to invest, save, and build a stable financial future once they graduate.
Many people resort to borrowing to cover unexpected expenses or meet daily needs, leading to increased debt. High-interest loans and credit card debt strain their limited income, as interest payments diminish their available funds.
A growing standard of living makes it difficult for people to save enough money for retirement. Priorities shift from saving for the future to meeting present financial demands.
Continuous financial hardship can worsen mental health by raising stress levels. The stress and anxiety brought on by having to keep up with growing costs can hurt relationships, productivity, and general quality of life.
In Summary
The escalating expense of living is a noteworthy obstacle for individuals and families, affecting their pocketbook balances and fiscal security. People are struggling to make ends meet due to rising housing costs, rising healthcare and education expenses, and other concerns.
It will take a multifaceted strategy to address these problems, including efforts to reduce income inequality, healthcare reform, student loan reform, and affordable housing programmes. By reducing the financial strain, society can work to build a future that is more sustainable and fair for everybody.