Inflation in Great Britain: “Everything is getting more expensive. Everything”

Energy prices: rising and rising. The inflation rate: now in double digits. Many Britons worry about what food they will have left in the near future. Relief is supposed to help, but is it enough?

Sue Lucas has a small fish shop in Camberley – a town west of London. The entrepreneur feels inflation every day. Everything is getting more expensive, she lists on the TV channel ITV: “Energy, packaging, distribution, cleaning costs are rising, the prices for sauces. Just everything.” And at the moment that means: The profit is lower – “definitely”.

Many families and pensioners are also struggling with the rising costs. Janet Kane had retired two years ago, at 66. Now she had to start working in a nursing home again – because of the high prices, especially because of the high energy costs. With what she earns, she has just 63 pounds – the equivalent of about 75 euros – for groceries a month.

The value of money keeps getting smaller

Kane is not alone: ​​more than two million pensioners live in poverty in the UK. And now the inflation rate has risen to more than ten percent for the first time in decades, mainly because of the enormous costs of gas and electricity.

Because in the United Kingdom, a lot of heating is done with gas, and gas is also important for generating electricity. Electricity and gas costs will continue to rise for the typical household, to around €5300 per year by next April.

Companies are now also reacting to the situation. A grocery chain announced that it would offer interest-free credit for shopping. This involves smaller amounts of up to 100 pounds sterling (120 euros). However, critics such as Labor MP Stella Creasy fear that such an offer could tempt people to spend more.

“It won’t be enough”

The government already decided on a series of aids in May. Every household is to be relieved of around 480 euros. For pensioners there is another 180 euros on top. Those who receive some kind of social assistance get even more.

It’s a pretty comprehensive program, says Paul Johnson, director of the Institute for Fiscal Studies, an independent economics institute. But the Johnson argues that inflation and especially energy prices are now much higher than they were in May. His conclusion: “So that won’t be enough for many households.”

The top candidates for the presidency of the Conservative Party agree. But they are in the election campaign, and Prime Minister Boris Johnson is on vacation – despite the crisis.

Two candidates, two concepts

Ex-Finance Minister Rishi Sunak announced that he would reduce VAT on electricity and gas, which would cost the state more than 14 billion euros. He also wants to initiate further support payments for households.

Secretary of State Liz Truss, on the other hand, who is competing with him to succeed Johnson, wants to cut taxes and eliminate levies for a green energy transition. Critics accuse her of not reaching those in need in society.

The Labor Party is calling for energy prices to be frozen at current levels to stave off significant increases. The corporations should pay for it. Opposition leader Keir Starmer wants to significantly increase the excess profit tax:

More debt – is that justifiable?

A proposal that could even lower inflation. Because the plans of Truss and Sunak cost a lot of money, the state would have to go further into debt.

Paul Johnson of the Institute for Fiscal Studies says more government spending could lead to more inflation – and the central bank raising interest rates. But he believes: “You have to take this risk.”