Think of it as your Boris bill. It will soon be coming through the letterbox in the form of much higher electricity and gas prices. It will be there at the supermarket checkout and it will also likely show up on the Christmas shopping receipts.
The fast approaching cost of Living Crisis 2.0 has been much in the news, but it hasn’t really bared its teeth. That’s about to change.
When ministers talk about people being “protected” from the gas price crisis, and parts of the media lazily follow suit, it isn’t repeated often enough that the cap is still about to shoot up by more than 12 per cent just as people are going to be needing more energy. That rain will start to fall next month. Customers on fixed priced energy deals are already waking up with new suppliers as the old ones go bust. With that comes less attractive deals.
Food price inflation is also just starting to get going. Researcher Kantar published its latest update on the nation’s shopping basket last week and put it at 0.1 per cent over the 12 week period ending 5 September.
That might not sound like much but there was an ominous sign: in-store promotions had fallen to what it described as “record lows”. This tells you that, faced with surging costs, partly as a result of the lorry driver shortage, supermarkets have stopped using special offers to compete for customers’ business. Instead, they have been battening down the hatches.
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Here’s another pointer to the shape of things to come: London broker AJ Bell’s investment director Russ Mould this morning called attention to the United Nations’ Food Price Index, which spans key agricultural materials such as cereals, vegetable oils, meat, dairy products and sugar. It’s up 33 per cent year-on-year, the fastest rate of increase in a decade or so.
We keep being told the relatively limited price rises we’ve been experiencing to date are “temporary” and that inflation will quickly calm down after a bit of a spike. The Bank of England’s Monetary Policy Committee stuck to this line in holding interest rates at 0.1 per cent. But expectations can change.
What does Johnson have to do with the UN Food Price Index anyway, I hear you ask. Not a whole lot on the face of it. He has about as much influence over, say, the global sugar market as he does over the winner of the next series of Love Island.
But here’s thing: if the great ship of state was running on an even keel, a potential problem like that would be much less of a problem. If the supermarket shelves were full, and there were plenty of trucks on the roads to keep them that way, and if the agricultural sector had enough people to pick fruit and vegetables and so on – all self-inflicted problems – then figures like the one highlighted by Mr Mould would be concerning but not frightening.
If the British government had taken action to secure the nation’s energy supply in the face of related warnings, then the nation would be able to wear a temporary spike in gas prices too. Government’s are supposed to do things like that, even if they don’t generate much in the way of headlines.
As it is, we’re all going to find it a lot harder to handle these “bumps in the road” and we’re all going to be waking up with big fat Boris bills on the doorstep.
How much will that be? Well, the Joseph Rowntree Foundation has made a stab at putting a number on it. It reckons that the combination of soaring energy costs and increasing consumer goods prices, coupled with benefits cuts, such as the £20 reduction in universal credit, will add an extra £710 in costs for poorer households. That’s the sort of bill people can’t fail to notice.
I’m sure the government will try a bit of BBC bashing and blow a few more raspberries across the Channel at Emmanuel Macron to distract people. But that bill will still be there, people’s pockets will still be bare and the the debt collectors will be banging on the door. Sooner or later, the government will have to pay a price for that.
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