Households are suffering from the biggest cut in living standards since the 1950s amid escalating food and fuel bills alongside rising taxes and interest rates.
Inflation is at 9%, its highest level in 40 years, driven by spiralling energy and food prices.
The average UK household's annual energy bill rose from £1,277 to £1,971 in April (equal to an extra £60 a month), while food prices are up around 6% on a year ago with the average UK household now spending an extra £23 per month.
Meanwhile, the Bank Of England raised interest rates from 1% to 1.25%, the fifth consecutive rise, last week. And around nine in ten households have felt the impact of rising prices, according to official data from the Office for National Statistics (ONS).
Here, we speak to three households about how they are coping with the ever-worsening cost of living crisis…
'The government needs to give people more financial support'
Su Morgan, 42, runs a coffee subscription service called Dog And Hat. She has changed her shopping habits and turned off the heating until autumn to cope with the 'crazy' price rises.
Su, who lives on the outskirts of York, says she is feeling the impact of rising prices both at home and in her business. The cost of green coffee that is grown in countries such as Ethiopia, Rwanda and Brazil has gone up by as much as 40% due to higher transport costs, crop damage and higher energy prices to roast the coffee.
To help lessen the blow of rising prices on her workers, the business owner has also increased wages for her two members of staff from £8.71 an hour to over the National Living Wage of £10.50 an hour.
The financial impact of all this means that Su recently increased prices for customers by an average of 12%. 'We've had to increase prices, but we have to be careful not to raise them too much as obviously we want to retain our loyal customers,' she says.
'We noticed our new sales drop very concerningly in March, as it seemed customers were putting their wallets away ahead of the impending price rises. But luckily sales have broadly recovered since then and we are increasing
Su, who lives in a detached four-bedroom farmhouse with her husband Dave and two daughters, aged eight and six, is also battling rising costs at home. Like many rural households, the family rely on oil deliveries to heat their home.
This oil is stored in a tank in the home, and Su says the cost to fill a tank has risen from £1,100 to nearly £2,200. The family would typically get through 2.5 tanks a year, but they switched the heating off two months ago to bring their annual usage to less than two tanks a year, until prices stabilise.
On top of this, their electricity bill has risen from £80 to £210 a month – Su operates her business in an outbuilding adjacent to her home, increasing the household's average electricity use. Meanwhile, the cost of the household's weekly grocery shopping bill has risen from £80 to £110 a week.
Su says the couple don't manage to save much on a typical monthly basis, so she is countering the rising prices by finding cheaper swimming lessons for her children, cutting back on holidays and cancelling the delivery of a weekly organic vegetable box.
'For the business, we are looking into launching a tea subscription to attract new customers and we hope that customers continue to see the appeal of good quality tea and coffee,' she says.
'I can't see the current energy prices being sustained this high for too long and I am optimistic costs will fall again next year.
'I'm lucky both my husband and I are working and we are in a relatively comfortable financial position. It does make me ask how families on single or lower incomes manage with these increases. It doesn't seem fair for people to be struggling so much and I think the government needs to give more financial support, especially those using oil in rural areas.'
'Buying a property feels much further away'
Sedra Badea, 32, works in a hotel and says the future feels uncertain as her wages vary each month and she is finding it difficult to make ends meet currently.
The pair are renting a one-bedroom flat and both commute to work in separate cars. Sedra, who drives a Volkswagen, says the cost of filling the tank – which lasts her around two weeks – has risen from £50 to £65 over the past couple of months.
Meanwhile, her electricity bill has risen from an average of £60 a month to £80-£100 and she's noticed her weekly shopping bill has risen from £20 to £25.
'The future feels uncertain, particularly as we both have varying wages each month,' she says. 'Months where we haven't worked many hours, or haven't been able to top it up with overtime, creates a perfect storm and we really notice the difference. We moved into our flat a year ago, and are nervous the landlord will put up the rent at some point.'
She adds that she is fortunate to have built an emergency pot of savings that she can dip into when times are tight. Having been 'terrible at managing money in the past', Sedra also uses an app called Wagestream, which gives employees access to their wages as they earn them for a £1.75 fee each time a transfer is made.
With the cost of living expected to get even higher as the year goes on, Sedra is about to start a new job at another hotel. She will be on more money, and will be paid a set annual salary rather than earning by the hour.
'I've been with my current employer for five years, and I do feel I'm moving from my comfort zone,' she says. 'But with prices going up I'm worried about being able to manage financially so it does make sense for me to try a new job. I'd like to build up my emergency savings pot even more. I used to save with the aim of buying a property, but now I no longer think of that as it seems much further away.'
'I can't see prices going down any time soon'
Tracy Prees, a single mother to a 13-year-old daughter, says she is coping with price rises by shopping around for better deals.
Tracy, who is 47 and lives in a two-bedroom home in Birmingham that she owns with a mortgage, relies on both Universal Credit and a part-time job as a driving instructor for her income. She gets around £600 a month through Universal Credit and feels she earns a decent income, but is only left with around £100 a month after all her bills and living costs.
Tracy was on a fixed energy deal until May 31, and was initially told by her supplier that her monthly bill would rise from £159 a month to £278 after this date. As this price increase would have been unaffordable to her, Tracy managed to line up a cheaper deal for £170 by switching to another supplier.
Price rises since April
Average annual energy bill: £1,971 +54%
Average annual water bill: £419 +1.7%
National insurance contributions: +1.25%
Average annual council tax: £1,966 +3.5%
Broadband and mobile phone: + up to 12%
Royal Mail stamps: first class 95p +12%; second class 68p +2.3%
Interest rates: Up from 0.75% to 1.25%
Food: +5.9% – an extra £271 a year, says Kantar
'I had to pick myself off the floor when I received the letter about my rising energy bill,' she says. 'There is just no way I could afford such an increase. I'm at work for most of the day while my daughter is at school, so I don't think we use much energy.
'I also have a smart meter and a smart heating system so I can control the central heating and turn off the lights from my phone if they've accidentally been left on.'
It used to cost her about £20-£25 for a day's lessons, but this has now risen to £35. She says most driving instructors are passing on higher prices to customers, and the average driving lesson has risen from £25 to £35 an hour.
Meanwhile, Tracy's shopping bill has gone up by £10 a week, so she looks for cheaper alternatives and collects coupons whenever she can. She also recently discovered the Too Good To Go app, which lets users buy and collect food due to be thrown away by cafes and restaurants at a heavily discounted rate.
Tracy has a few hundred pounds in savings through the Government's Help to Save scheme. This is a savings account where people receiving Universal Credit can get a 50p bonus for every £1 they save.
She tries not to use this unless in cases of absolute emergencies, and if she needs to buy a large item, she prefers to buy on credit. She recently bought a new sofa for £600 through Fair For You, a not-for-profit online lender, which she is repaying at a rate of £20 a month over three years, with interest repayments totalling around £100.
'I can't see prices going down any time soon,' Tracy says. 'I'm doing as much as I can – cutting back and trying to get coupons and discounts whenever I can. To earn more money, I hope to get an HGV licence this summer. I've got my theory test this month and hope to find a company to sponsor me.
'With such a shortage of HGV drivers at the moment, there are a few companies willing to fund your training if you work for them after you've passed.'
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