Last Updated on January 24, 2023 by Kel Ashley
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The cost of living crisis – what actually is it? What does it really mean; not only globally, but for folks like you and me who are trying to live our daily lives throughout this time of dramatic change? Confused? Fear not, because we’ll cover everything you need to know in this article. Let’s get into it…
The simple meaning of cost of living crisis is increasing the price of essential items such as groceries and bills are increasing faster than the average income of a family.
The economic impacts of the Russia-Ukraine conflict rippling out around the globe in a cost-of-living crisis that’s pulling millions of people into poverty. Rising food and energy cost have resulted in millions of people in developing countries pushing into poverty.
While supply-chain disruptions from the COVID-19 pandemic had already pushed up prices, inflation is rising due to further disruptions caused by the war in Ukraine. I know these things affect all of us in the world. Don’t worry, our free guide will help you make this easy a bit.
Reasons For The Current Cost Of Living Crisis
The Russia-Ukraine conflict is the primary cause behind the cost of living crisis right now however there are also other several reasons behind that.
- Covid
The covid pandemic has affected to the world’s health as well as the social and economic turmoil. Also, it seriously impacted the transport, travel, hospitality, entertainment and leisure industries. This economic downfall prepared the countries for the cost of living crisis.
- Weather
Asia’s unusually cold winter and most of the countries already made gas price skyrocket before the situation between Russia and Ukraine.
- Environmental concerns
Most UK electricity has traditionally been produced by burning fossil fuels in power stations. The rise of the green agenda has seen a movement towards renewable sources of energy to produce electricity, such as wind and solar, with older power stations – particularly coal-fired ones – being closed as a result. But renewables are not yet able to provide sufficient power, meaning continued reliance on expensive gas.
- Shipping Cost
The cost to transfer a shipping container from Asia to the UK increased from £3,000 to £15,000 recently.
- Agriculture
Farming and food production consumes a lot of energy which costs more than earlier. It also relies on fertilizer, another heavy energy consumer. Farmers needed to pay higher wages to their employees now. All those things make the product costs high and even higher in the market.
- Commodity prices
The price of raw materials has risen due to escalating transport and distribution costs, and that inevitably contributes to inflation across the board.
Worldwide Impact of the Cost of Living Crisis
The countries facing the worst effects of the crisis across all poverty lines, according to UNDP, are Armenia and Uzbekistan in Central Asia; Burkina Faso, Ghana, Kenya, Rwanda, and Sudan in sub-Saharan Africa; Haiti in Latin America; and Pakistan and Sri Lanka in South Asia.
But even in the most developed countries, people are going without food. In May, an Ipsos poll for the World Economic Forum found that 1 in 4 people were struggling financially in 11 developed countries. In the UK, as many as 1 in 7 adults now say they can’t afford to eat every day – an increase of 57% since January.
If this is happening to you, don’t worry, we’ve got a free resource to help you.
Reuters has been reporting on the impacts of the cost of living crisis in 18 countries around the globe in its three-part ‘Inflation Diaries’ series. Here are some of the ways inflation is affecting people’s daily lives:
- In Kenya, inflation is running at a five-year high of nearly 8%.
- In the UK, where inflation has climbed to its highest rate in 40 years, from 1.6% to 9.1% in 18 months
- In Bangladesh, 3.6 million unemployed people are struggling to find work as inflation hits an eight-year high.
- In Turkey, annual inflation is at a 24-year high of nearly 80% – but some experts say the true figure is more than double this official statistic.
- In Australia, inflation is at its highest rate in more than 20 years.
- Venezuela has left a four-year period of hyperinflation, which is when monthly inflation rises above 50%. In 2018, inflation reached 65,000%, according to the BTI Transformation Index.
Beware of Scammers!
We all know this is a hard time for everyone. But the most important thing we need to keep in our mind is that we have to beware of the people who made their job to trick others.
The cost of living crisis results in a higher amount of fraud and scams in society. The growing demand for credit products, such as loans and credit cards, made the way for it.
According to the 2021 Fraudscape Report published by fraud prevention firm Cifas, there were 360,000 fraud cases recorded on the National Fraud Database last year.
Identity fraud (such as taking out credit under someone else’s name) accounted for around two-thirds (63%) of this figure and grew by 22% during the course of 2021.
The vast majority (91%) of fraud reported last year was carried out online, with people aged over 61 disproportionately affected accounting for 24% of cases.
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