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From Liverpool to London, Inflation means Tighter Wallets and Colder Houses

LIVERPOOL, UK – For the past few weeks, Vincent Snowball has been without use of the depleted weekly food bank at a church near Liverpool city centre. But he’s still there every Tuesday, posing for fabric samples to advertise his upholstery services and to socialize with the people he grew up with.

Like many people across Britain, Mr Snowball, 61, was forced to cut back on his already modest expenses to stabilize his finances. Prices are rising at their level The fastest speed in three decades.

“I went to Tesco and was really shocked,” he said, referring to the popular British supermarket chain. Prices there are “disturbing,” he said. Instead, he shopped at Aldi, the fast-growing chain that’s billed as the cheapest supermarket in the UK.

Prices are surging in the United States and across Europe, driven by rising energy costs and supply chain problems triggered by the easing of pandemic rules. But in the UK, there is concern that a dramatic increase in electricity bills and heat, combined with food inflation, will push millions more into poverty.

The Bank of England on Thursday raised interest rates for the second time in two months – before the Federal Reserve or the European Central Bank. But policymakers concede that there is little they can do about the global factors driving inflation.

Across the country, people are cooling down or cooling down, turning to cheaper supermarkets, carpooling less, cutting out takeout meals and restaurants, and abandoning vacation plans.

Thursday brings more painful news as the government price limit on energy bill has increased by 54%, or about £700 ($953) annually, reflecting high global natural gas prices. The increase will affect 22 million households starting in April. That same month, the big increase in National Insurance, payroll tax funding the National Health Serviceamong other things, will also have the effect, further narrowing down payments to the door.

Although inflation is expected to peak in April, at 7.25%, Bank of England economists say household finances will continue to erode: Over the next two years, income Household income after inflation and taxes will be less than the year before, the bank said. This will be the third time in about a decade that real wages have fallen in the UK.

Arnab Bhattacharjee, a professor of economics at Heriot-Watt University in Edinburgh and a researcher at Britain’s National Institute for Economic and Social Research, said the period was “somewhat unprecedented because it came after the crash Covid shock is very big”.

Mr. Snowball’s gas bill went up, after Natural gas prices soar in Europe late last year, and so he mainly uses it for hot water. Despite living in the north-west of England, he rarely turns on the heater. “I am very conscious of what I use,” he said.

But there are limits to what Mr. Snowball can endure. He gets about £300 ($403) in state assistance towards his £550 monthly rent and £213 a month working tax credit, which provides financial assistance to low-income earners. There aren’t any luxuries to cut back on.

“There are millions of people like that,” Mr. Snowball said.

Although the UK economy has slowly shed much of the pressure from the sharp coronavirus recession, millions have not enjoyed the recovery. Since the beginning of the pandemic, the number of people general credit, the government’s main income income, doubled to six million. Since its peak almost 11 months ago, it has dropped to just 5.8 million. According to the Trussell Trust, a nonprofit that provides emergency food packages and independent groups, the number of people using food banks has also skyrocketed.

“A crisis in the cost of living was heralded last fall but what was surprising was the extent of food price inflation this time,” Mr. Bhattacharjee said. “This has not happened in the last decade.” In December alone, prices for food and non-alcoholic beverages rose 1.3%, the fastest monthly rate since 2011.

For more and more people, it is impossible to ignore. Katie Jones’ main grocery shopping trip, which she does twice a month, used to cost £80; now it’s more likely £100. Ms. Jones, 33, works full time in Liverpool city center at a branch of the national coffee chain. She lives across the River Mersey with her partner and their three children, and in December her energy bill rose from £95 a month to £140.

“We no longer have things to look out for in the house,” she said. “Partly for health reasons, but I also keep an eye on how much it costs.” And have fewer date nights with her partner because she can’t push the cost of them out of her head.

Food inflation is hurting those trying to help. Managers at Earlsfield Foodbank in south-west London recently decided to cut items from their service – including juices, snacks, cheese and peanut butter – because they are currently too expensive. And they will provide less toiletries and household items, such as laundry detergent.

Each week, the food bank buys a variety of fresh vegetables and fruits, and other foods, to supplement its donations. Over the past few weeks, the cost of supplies has increased unsettlingly.

“That number is growing and not really sustainable throughout the year,” said manager Charlotte White.

As the cost of purchasing increases, so does the list of people seeking help. Last week, eight more people signed up with Earlsfield Foodbank, and 71 people received food parcels. In March 2020, they received an average of 25 guests a week, with fewer families and commuters.

“Families have been and are at, if not over the threshold,” said Ruth Patrick of York University and lead scholar of Covid Realities, describing their experience through the pandemic. “We get a really dominant message about fear, anxiety and worry about how people are going to get over it.”

Through the project, Joanne Barker-Marsh, 49, has found some emotional, and sometimes financial, support. She lives in a two-bedroom house in the suburbs of Manchester with her 12-year-old son Harry, and worries that, with its high ceilings and uncovered floors, it is too cold.

“Probably, last year I was quite comfortable,” she said. “Now there is no cushion, nothing at all. Around October of last year, I thought to myself for the first time: ‘Wow, this really doesn’t look right, there’s nowhere else I can go.’

That month, the government’s £20-a-week boost to General Credit recipients ended, a pandemic-era boon she’s received since losing her part-time cleaning job in January. 2020. Recently, her bills from British Gas have grown to around £20 a month, to £90. She has taken advantage of her mortgage payment holiday, she said.

Despite years of financial difficulties, Ms. Barker-Marsh said she is now considering even more drastic changes. Namely selling her house. “I just didn’t have a choice,” she said. She is looking to switch to something even smaller and easier to heat. “The only asset I have in the world is this house.”

While food costs have skyrocketed and gasoline prices have recently hit record highs, energy bills are the biggest concern for many people.

And matters will get worse in April when the price cap rises, although the government is trying to soften the blow. The Treasury said it would give households up to £350 off this year in the form of loans and tax breaks, accounting for about half of the increase in the price ceiling.

A few weeks ago, Thomas Tonchev-Williams, a 33-year-old graduate student, had an unexpected surprise. He pays a flat £33.80 a month for gas, the estimated average to heat his one-bedroom apartment in central London over the course of a year. It’s part of an old house with high ceilings, no insulation, and only half of the rooms have double-glazed windows. The first two bills indicate he is using about £16 less in gas than he is supposed to pay. The next bill said he had spent more than £130. That higher fee and future ones will push his monthly rate higher or put him in debt to his provider.

“Although I have spent less time at home than during the height of Covid, my energy bill has never been higher,” Mr. Tonchev-Williams said.

Now, he restricts the temperature strictly to one hour in the morning and four hours in the early evening. Instead of turning it over late at night, he puts a second duvet on the bed.

Some people don’t know how to cut further. At church in Liverpool, Christine Owens, 61, switched energy suppliers to access a government-sponsored rebate program. But then a few weeks later, the new supplier, EDF, started sending her letters saying her £35 twice-monthly flat payment wasn’t enough to cover her fuel use. – she owes £1,000.

“It’s been a struggle trying to bring it up more,” Ms Owens said of her payments.

https://www.nytimes.com/2022/02/04/business/uk-inflation-cost-of-living.html From Liverpool to London, Inflation means Tighter Wallets and Colder Houses

Fry Electronics Team

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