Cost of living - is it a crisis?

In simple terms, the cost of living is the cost of maintaining a decent standard of living and typically is defined as the amount of money needed to cover basic expenses such as housing, food, taxes, and healthcare in a certain place and time period.

In the media we are bombarded by facts, figures and percentages. That alone can cause anxiousness and an ever increasing negativity in our wellbeing. If a crisis is an event or period that will lead to an unstable and dangerous situation, then it would appear we have reached that point.

I will say now that I am not an economist and there may be many who will read aghast at my clumsiness and ill-informed conclusions. I would happily defer to the far greater knowledge and skill. One thing I do believe though is the teachings of Richard Feynman. With that spirit, try I shall and I'll use the statistics that are readily and publicly available at Office for National Statistics and various departmental statistical releases.

Let's go back 10 years. It's 2012. The Queen is celebrating her Diamond Jubilee, the UK is welcoming the world to London in the 30th Olympiad, Carly Rae Jepsen's "Call Me Maybe" and Maroon 5's "One More Night" tied for the longest-running number-one single of the year and 3D printing was entering the retail consumer market. Remember it?

In 2012, the median annual earning in the UK was ￡26,500 with an average weekly shopping bill of ￡58.60, rent of ￡163 a week, energy ￡23.69 a week and it cost ￡54.56 to fill an average petrol car.

Now let's look at 2022 where the median annual earning in the UK is ￡29,380 with an average weekly shopping bill of ￡102.79, rent of ￡260.08 a week, energy ￡37.90 a week and it costs ￡82.74 to fill an average petrol car.

Some may look at the percentage change. Median earnings are 10.9% higher, shopping is 75.4% higher, average rent is 59.6% higher, energy is 59.9% higher and the average petrol car fill is 51.6% higher. So the change in cost exceeds the change in earnings, right? Well yes, but what if earnings were previously doing well or 'buying power' was strong because the strength of currency was high? This is the prices chasing wages argument.

Instead we could take each as it is today but price it as it was in 2012. This would show our ￡29,380 earnings would have been ￡22,384.67. Our average weekly shopping bill of ￡102.79 would have been ￡78.32. Our average rent of ￡260.08 would have been ￡198.16. Our average energy bill of ￡37.90 would have been ￡28.88. Our average petrol car fill of ￡82.74 would have been ￡63.04.

Now we can see the 'real terms' change and it reveals median annual earnings have deflated by 15.5% whereas average weekly shopping has inflated by 33.7%, rent inflated by 21.6%, energy inflated by 22% and average fuel fill inflated by 15.5%.

Back to the question - is there a crisis? The evidence unfortunately points me to yes. The answer? A wage rise across the board (but may force prices up further)? Government support whilst the economy grows and our 'buying power' catches up (but may cause unsustainable public spending deficits)? Increased or extraordinary regulation of critical services and products (but may overstep and cause economic depression)? An extraordinary tax on profits (windfall) for those who have benefitted from the economic conditions (but may cause an unattractive market to operate in)? We've heard all of these from many different quarters. I humbly suspect though we are at the limit of my economic skill, or that I already have people tutting at the screen. This is therefore one, perhaps, for the economists.

One thing I can say with certainty though is that the answer is none of the above. No one solution will solve the issue which is a culmination of economic growth, inflation, world affairs and social change. The answer is a comprehensive suite of options, developed at pace, which brings together citizens, communities, business, government and regulators. Some instant in their delivery, others readily prepared to follow and a few on the shelf with the groundwork completed as contingencies. This is something that is possible to accomplish in days and weeks; not weeks and months.

It needs strategic, people-focused and compassionate leadership......now.