Rocketing rates of inflation, rising energy bills, higher train fares and the National Insurance hike will combine to send living costs spiralling in 2022.
There are a number of factors behind what has been termed the 'cost of living crisis', which will place extra financial pressure on people across the UK this year.
Inflation rose to 5.4% in December 2021 - its highest rate since the early 90s. Prices, especially for raw materials, have increased as covid-19 hit global supply chains with a combination of pent-up demand and delays to shipping, while factories across the world face lockdowns and worker absences.
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Food prices have also risen as wages increase, including for HGV drivers due to recent shortages and with thousands of drivers leaving the UK to return to their home countries in the EU.
Not only did wholesale gas prices shoot up by around 500% in 2021, causing eye-watering rises in energy bills, but the Government's review of the energy bill price cap is predicted to cost bill payers hundreds in 2022.
Additionally, the Government has allowed train firms to increase ticket prices by almost 4%, meaning people wishing to avoid record costs at the petrol pumps will also feel the pinch of higher public transport costs.
The cost of living will increase across the country this year - the Resolution Foundation recently said that each household can expect outgoings to increase by £1,200 this year.
Below, we look at the ways in which life in Merseyside will become more expensive in 2022.
Travel
Earlier this month, Merseyrail single and return fares increased by 3.8%.
Railpass journeys - which cover weekly, monthly and yearly tickets - will rise at the same rate in March.
Additionally, Day Saver tickets will increase by 10p, but the price of Family Tickets will be frozen.
This comes after the Government allowed train firms to increase prices by 3.8% in order to offset the financial impact of the coronavirus pandemic, which saw passenger numbers reach some of the lowest levels in more than 100 years.
This year’s 3.8% increase in ticket prices follows a 2.7% rise at the start of 2020 and means the average price for train tickets has shot up by 48.9% since 2010.
Increased prices for rail journeys outside of the Merseyrail network will come into effect from March of this year.
From March, as a result of the 3.8% rise in fares, the price of an off-peak return from Liverpool Lime Street to London Euston will rise from £94.50 to £98.10, under the new rates.
Energy bills
Research by energy experts Boiler Central found Merseyside and North Wales have the highest electricity bills in the UK , paying over £800 on average a year.
This is £100 more than the area with the cheapest electricity costs.
Electricity costs in Merseyside and North Wales, which saw a 7.5 % increase in 2021, are nearly £50 higher than the average yearly electric bills for the whole of the UK.
The situation is not set to improve any time soon, as the Government’s price cap on energy bills will be revised in February and new prices will be implemented in April.
Current predictions state that bills could go up by 50%, causing some households to choose between heating and eating.
Martin Lewis of Money Saving Expert warns that the change to the energy price cap will add a further £600 to gas and electricity bills, while the Mirror reports that the annual bill for an average three-bedroom gas-heated home could rise by £240, meaning a total cost of £1,360.
Shopping
A rise in food prices saw inflation hit its highest rate for almost 30 years.
The latest figures have showed that food retailers are also starting to pass on higher costs to consumers, with inflation firmly hitting the supermarket shelves.
Figures from the Office for National Statistics (ONS) showed that Consumer Prices Index (CPI) inflation rose from 5.1% in November 2021 to 5.4% in December.
This means inflation is at its highest level since March 1992, when it stood at 7.1%.
Grant Fitzner, chief economist at the Office for National Statistics (ONS), said: “The inflation rate rose again at the end of the year and has not been higher for almost 30 years.
“Food prices again grew strongly while increases in furniture and clothing also pushed up annual inflation.
“These large rises were slightly offset by petrol prices, which despite being at record levels were stable this month, but rose this time last year.
“The closures in the economy last year have impacted some items but, overall, this effect on the headline rate of inflation is negligible.”
ONS figures showed that food and drink prices lifted by 4.2 per cent year on year in December, which is the biggest rise since September 2013, while clothes shops also put up prices by an average 4.2 per cent.
The Bank of England has warned inflation will rise to 6% in April, but many experts are predicting it could peak at close to 7% before falling back.
Samuel Tombs, at Pantheon Macroeconomics, said December’s inflation figures leave the Bank of England with “little choice but to hike rates again in February”.
He said CPI is likely to peak “slightly above” 6 per cent in April.
He added: “Nonetheless, we continue to expect CPI inflation to fall back swiftly after April and ultimately to undershoot the (Bank’s) 2 per cent target in 2023".
National Insurance
National Insurance will rise in April in order to fund social care, breaking an election promise made by Boris Johnson in 2019
The contribution paid by Brits will increase by 1.25% and will cost around £180 a year for a worker on £24,100; £255 for a worker on £30,000; and £715 for a worker on £67,100 in national insurance payments.
In the 2021/2022 tax year, someone earning £30,000 a year will pay £2,451 in National Insurance.
That is due to rise to £2,707 in the next tax year when National Insurance rises from 12% to 13.25%.
The Big Issue reports that any graduates earning more than £27,295 will essentially be paying a marginal tax rate of 42.25 per cent after student loans, income tax and national insurance contributions are deducted from their salary.
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