Food and energy costs rise sharply
of of a loaf
The cost 9p. 1971 was bread in same-sized the
In 2021, £1.20. loaf cost
The boss of Tesco, John Allan, has warned that supermarket prices are set to go up. Allan said groceries could be 5% more expensive by spring. The rise in prices over a period of time is known as inflation. Inflation is at its highest rate for 30 years, which is worrying because some people will find it difficult to afford even basic goods, such as bread, milk and other everyday items.
What is inflation?
Inflation is when prices rise. It affects people because their money becomes less valuable. For example, if the price of sweets rose overnight but your pocket money stayed the same, you would be able to buy fewer sweets. The rise in inflation is partly because prices are going back up after some of them fell during lockdown. Another reason is it now costs more to make and transport goods – and shops have to charge people higher prices to pay for it.
Which other costs are going up?
The price of energy, such as electricity and gas, will also go up in April. This is because the price that energy companies are allowed to charge was recently raised by Ofgem, the organisation that sets these rules. Energy companies are putting up their prices because it is costing them more to buy the gas, which they also use to make electricity. This is because all over the world people are using more gas and now there is a shortage. It means that an average family will have to spend £600 more each year to pay for their energy. Also, taxes
(the money that some people pay to the Government) are going up to help pay for the NHS and care for old people. This means most working people will have less money but their energy and food bills will be more expensive. This is called the “cost of living crisis”.
What has the reaction been?
The Government has said it will give people back some of the extra money they’ll have to spend on energy. However, Labour politician Rachel Reeves said people will have to pay it back again later. Labour also wanted the rise in taxes to be put off for a while to help people. Anti-poverty charity the Joseph Rowntree Foundation has warned that many people will have to choose between heating their homes and having enough food to eat.