Lots more talk on the rising cost of living this week. It was also something I also noticed directly in my weekly food shop too.
To be fair it has been a while since I have done a full regular weekly shop. With trailing Christmas rations, COVID restrictions, and to be honest January cake-related reasons, I seem to have relied more on my local corner store than my local supermarket recently… but this week, with things looking up, it was time to get back into the routine.
The rise in the cost of living is getting real
Now, I am sure it has been creeping up for a while unnoticed, but sometimes you get to make direct comparisons and it hits you in the face. My weekly shop seemed to be around 50% more than it used to be.
Now we all know there has been some inflation, but 50% is quite a lot more than the 5% annual headline figure in well, the headlines. This is something that food poverty campaigner Jack Monroe has been pointing out for a while, and someone who is now talking with ONS to enable this to be better reflected in the stats (good on her btw).
But, here it was direct evidence in my shopping basket.
Now food of course is something we cannot really manage without, the other item in this category is the energy we use to stay warm.
In hot water… or not
Over the last year, we have also seen the price of wholesale natural gas increase significantly. This is to the point that it has put a lot of energy businesses out of business.
As a result, it has resulted in millions of us moving suppliers, a consequence being many of us have also moved onto standard tariffs.
Now if you were on a fixed price tariff before, this has already resulted in your energy costs increasing… however, even the standard tariff does not expose you to the full market price as yet… it is smoothed with price caps to prevent this happening.
But, history will catch up with us. Eventually, these price increases will kick in. With the announcement of the next standard tariff price increase is due next month, it going will be live on our bills in April.
With such a large number of us on these standard tariffs, this will impact a lot of people, and looking at wholesale prices estimates I have been hearing is that we could see increases in our energy bills of over 50% each month.
Time to be prepared
By adding both of these two, non-discretionary, expense increases together, it all adds up to a serious assault on our cost of living. It is once, especially for those on tight budgets, that is going to be difficult to absorb and could be enough to push many people over into deficit. All of this could have a serious impact on arrears levels across the economy.
Back to Basics
With this in the background, I too am thinking about how I can reduce costs in advance. Be it changing where I shop, cooking more at home, and just buying less stuff, there is seemingly always an opportunity to economize.
However there is also a limit to this saving, and for those with debt and behind on payments, there will also be a priority to provide appropriate support and forbearance plans to help people through what can be a difficult time.
Is now the time?
Of course, we have been expecting an increase in the levels of arrears for a while now. It was something we were all very concerned about early in the COVID pandemic.
But, the levels never really materialized (undoubtedly helped by government support). With maybe a slight questioning feeling of, were we all a little overdramatic at the time… the fear of arrears seems to have gone away.
But, is it different this time around, and are we now so desensitized that we are not taking action when we need to? Maybe.
So it may be time to re-dust off the plans, invest to ensure there is adequate staffing capacity and processes to handle the volume.
… and finally
One last thought in all of this is the importance of good customer service.
Going back to my shopping example, I have been ordering online for a while now, and am pretty used to unpacking and repacking boxes to bring my shopping inside to pack away.
This week however I was late to getting outside, and not feeling much up to the task… it had been a long day.
Imagine my surprise when the driver had already repacked the boxes to just take inside… needless to say, I was pleased and grateful.
Linking this experience back to customers in financial difficulty and forbearance… a customer helped in difficult times can make a customer for life… just something for us to think about in times ahead.
Have a good week everyone.