Brits Experienced Highest Inflation Rate in Decades
In the UK, inflation, which gauges the yearly average price fluctuations of goods and services, has surged to a concerning level. In October 2022, the inflation rate in the UK hit an alarming 11.1%, primarily driven by rising costs in food and energy. While energy prices have begun to recede, households continue to grapple with many factors pushing up their expenditures. The significance of food prices for families cannot be understated, but other contributing factors, such as the escalating expenses related to transportation, are also exerting upward pressure on prices.
High Inflation Affects Supply Chain
Rising costs and uncertain economic conditions pressure logistic providers and supply chains. Transport expenses generally affect the overall living costs in the UK. If transport is not cost-effective, it will raise the prices of food goods and services. The higher costs of these necessities contribute to the persistence of high inflation and create additional financial strain for families. After the pandemic, the UK inflation has remained stubbornly high, decreasing the living standard.
Driver Shortage Raised Transportation Costs
Unfortunately, the shortage of skilled drivers and the associated high logistic costs have hindered any substantial decline in inflation. Throughout recent years, logistics companies had to deal with the lack of Heavy Goods Vehicle (HGV) drivers. Shortage of skilled drivers and high logistic costs hinder the inflation decline. Nearly half of fleet-based companies still suffer from driver shortages, and the workforce challenge has increased pressure on commercial.
Fuel & Public Transportation Costs Surges
Hotels, restaurants, and supermarkets always have to rely on the timely delivery of supplies to meet the needs of their customers. These businesses play a crucial role in people’s everyday lives and affect overall living costs in the UK. The transportation system is also under the influence of fuel prices. RAC fuel watch has reported the price of petrol and diesel have risen in mid-summer. Besides, Rail and airfares increased in 2023 compared to the same time in 2022.
PM Faces Economic and Political Challenges
Higher logistic costs and higher fuel prices mean an increase in transportation costs, affecting overall living costs. The soaring inflation, coupled with the challenges faced by the transit industry, necessitates the intervention of the government to make essential services more efficient and affordable. Strategies must be implemented to tame inflation and raise living standards. However, the UK Prime Minister Rishi Sunak faces daunting economic and political challenges.
UK Needs Strategies Other Than Austerity
Rishi Sunak, a former Chancellor of the Exchequer, served within the deeply divided Conservative Party and advocated for austerity policies. Under Conservative leadership, significant budget cuts were implemented, reshaping the welfare landscape for over a decade. These measures disproportionately affected the most economically vulnerable segments of the population, leading to substantial increases in absolute poverty. Furthermore, the Conservative governments have struggled to address the ongoing cost-of-living crisis in recent years effectively. Inflation has surged beyond manageable levels, and the public debt has exceeded 100% of the gross domestic product for the first time since March 1961.
UK Economy Faced Stagnation
The UK’s economic growth has stagnated, which calls for more decisive action from the government to control inflation. According to the National Institute of Economic and Social Research, the UK is on the course of experiencing five years of lost economic growth. Researchers have predicted that in 2024 inequality and unemployment will increase in the UK. Moreover, the elevated food and energy costs will continue to grow in the coming years.
The Falling Inflation is Still High
The UK’s economy is anticipated to be notably smaller in 2026 than in 2019. Despite the bank interest rate holding steady at 3.5%, the inflation rate is expected to exceed the target by 2% in 2026. Britain has experienced the most severe inflation within the G7 since the onset of the pandemic, primarily due to an energy crisis that swept across Europe. While the inflation rate in the UK is on a downward trajectory, it remains at a high level. Regrettably, this elevated inflation significantly impacts the affordability of goods and services for households in the UK.
Conservative Crisis Must Be Solved
Supply chain disruptions after Brexit and the war in Ukraine, in addition to skyrocketing prices of foods and other essentials, exacerbated inequalities in the UK society. Yet, the United Kingdom has sunk into the Conservatives’ political crisis since Brexit. David Cameron resigned in 2016 after the EU referendum and losing the Brexit gamble. Theresa May resigned in 2019 because she could not deliver a Brexit deal.
Conservatives Suffer from Toxic Division
Boris Johnson had Brexit done, although he had to resign after several cabinet members’ resignations. Following his resignation, the shortest-serving prime minister of the UK, Lizz Truss, was forced to resign after her destructive budget plan crashed the UK markets. Such toxic division among the Conservatives has cost the UK a lot. The Conservative Party has been in power for too long, and a better set of strategies is mandatory to boost economic growth.
UK Needs International Credibility
The Conservative government effectively controls inflation and addresses the cost-of-living crisis. Otherwise, the inflation rate will be above the Bank of England target. The UK’s economic changes have increased prices while reducing consumer purchasing power. The UK government has to do more to balance the budget shortage. The UK needs to restore its international financial credibility, and the UK index of production growth rate must be increased.
Zero Economic Growth Is No Longer Tolerable
There are scores of problems that the government must solve to safeguard households’ well-being. Unfortunately, the regional economies in the UK are underdeveloped, and the economy will be on zero growth during the next five years. The National Institute of Economic and Social Research has warned that 60% of the economy will be in recession until the end of 2024. Nevertheless, growing productivity and increasing investment could help ease the financial crisis.
Political Issues Must Be Solved
In addition to economic and financial solutions, PM Rishi Sunak must be able to control a Conservative Party involved in divisive issues over economic management and political responses. If the party does not overcome the split, it will lose popularity in the next general election. Indeed, the Conservative Party must put the political farce aside to take the overall living costs under control.