The Cost of Living Crisis in 2023

In this blog, Park’s saving experts explore how the cost of living crisis UK is continuing to affect households in 2023.

Date:

28 March, 2023

Cost of living crisis 2023: the facts

Since 2021, the UK has been experiencing a cost of living crisis. It’s hard to ignore – it’s still cropping up in the news or in conversation – with family, friends and in shops.

With inflation still high in 2023, the cost of living crisis continues to impact household budgets. Park’s saving experts have been looking at the issue and exploring ways that could help us all, from clever money hacks to better ways to cope with the stress it can create. At the bottom of this article, there’s a resource bank section with links to various groups offering help.

Why is the UK cost of living crisis still rising?

There’s seemingly a million and one different reasons for the cost of living crisis. As the situation has progressed, some have become more prevalent than others. The following issues are the crux of why the cost of living has increased for the majority of us.

  • The increase in gas and electricity prices. Second only to America, Russia produces the next largest supply of gas in the world. However, many countries have stopped importing Russian commodities as display of solidarity with Ukraine. According to a study, global household energy costs will rise between 62.6% and 112.9%.

  • The Russian invasion of Ukraine. As Ukraine is a major exporter of agricultural goods such as wheat and sunflower, the war has meant cargo ships are unable to leave port cities bordering the Black Sea; Russian blockades are putting a stop to all maritime trade.

  • Inflation. The rise in inflation to over 10% has not only increased general costs, but also unavoidable costs like mortgages. While there are hopes it will drop back to 2.9% later this year, that doesn’t mean prices will fall back to where they were. In actual fact, they’ll keep increasing - just at a slower rate.

  • A drop in disposable household incomes. As household incomes are not increasing as much as prices, many families don’t have the disposable outgoings they once did. According to Experian, the number of households with £1,000 per month or less to spend after paying the bills has grown to nearly 60% of all UK households

Park HQ have put together a few blogs suggesting ways to keep mindful, which you can read here and here. Managing our mental wellness can help contribute towards bettering our relationship with money. Thousands visited those articles to find out how to make additional savings, improve financial wellbeing and manage the mental health impact of financial stress.

According to the Mental Health Foundation, people living in poverty are more likely to experience stress. This comes as no surprise, as there’s been an increase in people approaching mental health charities for help during the cost of living crisis.

We all worry about these things – especially when we consider there’s not much we can do to change what’s happening in the world. But what we can do is focus on ourselves and what matters to us – family, friends and our community. For example, even in good times Christmas can be stressful, so if we want to make sure we still have a nice Christmas, we can put a little aside each month with Park Christmas Savings. It’s free to join; learn the ins and outs of early bird planning by clicking here.

Resource bank

Here are some further resources to take a look at.