What can we do about the cost of living crisis?
17 November, 2022At Pollok Credit Union, we have a duty to educate and communicate with our members and our community, and that means not shying away from the tough discussions. For many, the cost of living crisis caused by recent and forecasted inflation surges will mean making some tough financial decisions. We’re sure you will be used to hearing the terms ‘cost of living crisis’ and ‘inflation’, but just what does it mean for families and individuals in the West of Scotland, and why should you stay up-to-date on what’s happening?
Scottish households are being forced to make some tough decisions in order to abate rising living expenses. Photo credit: Canva
Essentially, inflation means that the spending power of consumers has fallen relative to the cost of goods and services like gas, electricity, food, clothing etc. And whilst a slow, steady rate of inflation is completely normal, the rate of inflation is currently at a staggering 11.1% (Bank of England 2022). According to the BBC, this is the most rapid increase in 40 years. Like us (we’re no different here at PCU), you may have already winced after finding out the sharp rise in your latest bills, and this trend is set to continue and rise into the winter.
The hike in prices has raced ahead of the rate of pay, in turn leaving many with difficult choices to make when it comes to heating their homes and paying for their shopping. It’s not just fuel and energy prices either, the cost of TV and broadband, rail fares and mortgage interest rates have also risen considerably.
So what’s been done to tackle inflation?
Often, in order to fight inflation, the Bank of England responds by raising interest rates so that people are borrowing more and spending less, thus easing the demand for inflated goods and services. Although interest rates are high at the moment, this is expected to change over the next couple of years. The Bank of England have said that they “expect inflation to fall back from the middle of next year towards the 2% target in two years’ time.” The reasons they give for this are:
“First, the price of energy won’t continue to rise so quickly. The Government has introduced a scheme that caps energy bills for households and businesses for six months.
Second, we don’t expect the price of imported goods to rise so fast. That’s because some of the production difficulties businesses have faced are starting to ease.
Third, we expect there to be less demand for goods and services in the UK. That should mean the price of many things will not rise as quickly as they have done.”
This is good news, but does little to help with the costs people are facing right now.
What is the government doing to help us with the cost of living?
In the UK, the national minimum wage will rise to £10.42/hour in April, a rise of 9.7%. This will help those in minimum wage keep up with the rising prices of consumer goods and will go some way to helping those with families and high gas and electricity bills keep up with energy costs. But although the rise in minimum wage will help bring lower income individuals closer to the rate of inflation for goods and services, inflation is still outpacing wage growth. Ultimately, this will mean that lower income households will have less money to spend and will be forced to make some difficult decisions in order to save money and cut expenses.
There is some more good news though: all households in the UK are receiving a £400 energy bill subsidy between October 2022 and March 2023, paid in monthly instalments. While this may not seem like a huge amount to those whose gas, electricity and food prices are soaring, it will ease the pressure on many families and individuals, which includes those who do not find themselves in fuel poverty but have seen their spending power significantly reduced.
The news can be overwhelming but it’s important to stay informed when you can so that you know what support is available for you. If you pay your bill by Direct Debit, or have a smart meter, then this discount will be applied automatically to your bill. However, subsidies for other forms of payment, such as traditional prepayment meters, work differently. Check the government advice here to make sure you access the subsidy.
So what can I do to help myself?
It’s not all down to external factors and what businesses and governments decide to do; here are some tips to save yourself some money and cut your living expenses.
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Time to get negotiating.
While it’s not guaranteed to work, a very good way to save money is to see if you can renegotiate some of your contracts, such as your broadband and phone contracts.
If you’re strong enough to handle the terrible hold music and difficulty reaching a customer adviser, you can ask for a re-evaluation of the cost of your contract. A great way to do this is to say that you’re not getting your money’s worth for the service you are receiving and ask if there’s any way of paying less for what you get. If you find that isn’t working, you can let the company you’re with know that you are going to find someone else, as often broadband suppliers will offer new customers discounts. However, be sure to know what prices are on offer elsewhere to quote to your current supplier.
If in the end they’re not budging, you might have to consider going elsewhere or just biting the bullet, but it’s definitely worth a try!
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Save the planet, save your pockets.
What’s better than saving yourself some money than when you’re helping the environment in the process?
Check out this post on our Instagram for various tips and tricks to help save the planet and your bank account. You could also try making your own quick and easy multi-purpose cleaner that reduces plastic waste and reliance on toxic chemicals — we show you how in this post.
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Take a spending vacation.
We’re not suggesting that you’ll be able to buy yourself a house if you just stop paying for your Netflix, but you might want to dedicate one weekend here or there to some free activities: a ‘skint weekend’, if you will. Whether it’s with your family, friends or your partner, mark out some time on your calendar to spend a full weekend where you don’t have to spend a ton of money on food, drink, transport etc.
Why not choose a scenic spot to go camping or hillwalking, have a lazy day with a movie marathon (without ramping up a huge takeaway order) or go gallivanting around the city in places you’ve never seen before.
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If you’re struggling, check out Threehills Community Supermarket.
If you’re struggling to pay for your groceries, Threehills is a fantastic new community supermarket based in Nitshill which provides locals with access to affordable groceries. Threehills is currently running a larder in Museum Business Park. You can find out more about them at threehillsglasgow.org.
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Talk to us.
Last but not least, talk to us. If you’re finding that you’re struggling to pay your bills or that things are getting a bit too tight just now, please let us know and we will see how we can assist you. Pollok Credit Union is dedicated to the financial empowerment of its members and that is why we want to help your money work for you. We’re a close community here at PCU, and we want you to know that we are here to help when you need us.
The bottom line.
Even though it’s always good to look for the positives, a harsh reality faces our community and that means tough decisions need to be made and frank discussions had. The cost of living crisis is significantly affecting much of Glasgow, but our resilient community at Pollok Credit Union can be a great source of strength and support to see us on to a bright future.
Sources:
Bank of England (Nov 2022): ‘Will Inflation in the UK Keep Rising?’ Available at: https://www.bankofengland.co.uk/knowledgebank/will-inflation-in-the-uk-keep-rising [Accessed 17/11/22].
BBC (Nov 2022): ‘What is the UK inflation rate and why is the cost of living rising?’ Available at: https://www.bbc.co.uk/news/business-12196322 [Accessed 17/11/22].
UK Government (Nov 2022): ‘Large Minimum Wage Increases Help Protect Low-Paid Workers’ Living Standards.’ Available at: https://www.gov.uk/government/news/large-minimum-wage-increases-help-protect-low-paid-workers-living-standards#:~:text=Minimum%20wage%20rates%20from%20April%202023%20have%20now%20been%20announced.&text=The%20National%20Living%20Wage%20(NLW,pence%20or%209.7%20per%20cent. [Accessed 17/11/22].
UK Government (Jul 2022): ‘£400 energy bills discount to support households this winter.’ Available at: https://www.gov.uk/government/news/400-energy-bills-discount-to-support-households-this-winter [Accessed 17/11/22].
