Christmas cost hike faced by millions of households amid supply crisis
Have yourself a very costly Christmas is not how the festive favourite goes but it is on the cards for millions of households this year.
Consumers face a bitter cocktail of soaring prices as they feel the financial pinch in the run up to December.
The global economic recovery from the COVID-19 pandemic has caused a worldwide supply crunch, significantly driving up the cost of raw materials and shipping, which inevitably ends up being passed on to the customer in the end product.
Live updates from around the UK on the energy crisis
‘We’ll move heaven and earth’ to alleviate shortages
Toy firms have already warned that prices will spike this Christmas as businesses try to recover some of the expense of transporting items to Britain, while Christmas trees are also set to cost more in the face shortages.
Closer to home, a major shortage of lorry drivers in the UK, fuelled by the coronavirus crisis and Brexit, has also hit the supply chain, leading to empty supermarket shelves and higher prices as firms are forced to increase salaries and introduce signing on bonuses to fill gaps.
This has already been reflected in higher living costs, with the consumer prices index (CPI) measure of inflation was running at a nine-year high in August.
Experts previously predicted the record 3.2% increase could accelerate to more than 4% by the end of the year.
Added to this are fears shoppers could start panic-buying, particularly with in the lead up to Christmas.
The National Farmers’ Union (NFU) has called for an urgent COVID recovery visa to allow firms to recruit from outside the UK to alleviate “crippling” labour shortages across the supply chain.
HGV driver shortage ‘a cocktail of chaos’
Andrew Opie, director of food and sustainability at the BRC, said: “HGV drivers are the glue which holds our supply chains together.
“Without them, we are unable to move goods from farms to warehouses to shops.
“Currently, the UK faces a shortfall of around 90,000 HGV drivers and it is consumers who ultimately suffer the consequences.
“Unless, new drivers are found in the ten days, it is inevitable that we will see significant disruption in the run up to Christmas.”
He added: “Retailers are working hard to minimise the impact, attracting, and training new drivers through increased pay, bonuses and new driver training schemes, as well as directly supporting their suppliers in the movement of goods.
“Now government must play its part by creating temporary work visas to allow drivers from abroad to fill the gap and keep our supply chains moving while new drivers are being trained and qualified.”
At the same time as the rising cost of goods ahead of Christmas, many families are also threatened being hit in the pocket with a rise in gas bills, triggered by a surge in global wholesale fuel prices as economies have reopened.
This saw the regulator Ofgem hike the energy price cap, which is supposed to act as a “backstop” protection for customers on default tariffs, by a record increase to £1,277 from 1 October for a typical user.
This coincides with the ending of the £20-a-week uplift in universal credit payments for some 4.4 million households on 6 October.
Amid continuing job uncertainty, many families are also still trying to deal with the financial fallout caused by COVID-19.
Some are wrestling with higher debts than they would have otherwise had, after taking payment holidays to cope with the immediate financial threat from the pandemic.
According to UK Finance figures, the average value of suspended mortgage payments per month was £755.