2022 has arrived the great news that coronavirus seems to be under control. However, this news has been buried under the wait for the Sue Gray report, the crisis in Ukraine and the news cost of living is about to rise steeply.
Four reasons why has the cost of living is about to rise?
National Insurance Rises
The health & social care levy, 1.25 percentage point rise in National Insurance contributions from 12% to 13.5%, will be deducted from pay-packets in April. The increase aims to raise £12 billion, initially for the NHS, and then to cover the rising costs of social care.
As workers return to the office, they’re likely to be hit with a hike in fuel prices. The rise is a surge in wholesale oil prices and a weaker pound. The average diesel price is now a record £1.50, and there is no change in the foreseeable future for that will see the prices drop.
In addition to rises in motoring costs, rail fares will to rise by 3.8% in March.
Similarly to diesel costs, worldwide prices and a weaker pound have meant that wholesale fuel costs have risen for energy suppliers in the UK.
The weight of the rises have not been felt by the majority of UK household as the energy price cap is still in force. The price cap ends in April to coincidence with the national insurance rise.
The Treasury and Bank of England annual inflation target of 2% annually has already been shattered. In December, inflation stood at 5.4%, from November’s 5.1%, the steepest rise in 30 years. Inflation may yet to rise to 7% when the energy price cap ends.
Employers will feel affected by the Cost of Living rises.
Studies by Barclays estimate that for every £1 million an organisation spends on payroll, it loses 4% of productivity due to poor employee financial well-being. As the cost of living crisis affects more and more families, the loss percentage is likely to increase.
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