“The children are hungry! They are eating erasers because they cannot afford to buy lunch!” says The Guardian. This headline then flew to Indonesia and became quite a viral sensation in my home country. People even shared the news in Whatsapp groups, and my mum was one of them.

Knowing that people outside the UK are worried about the cost of living crisis in the ‘once mighty empire’ sure feels odd. Because I typically was on the other end, commenting on troubles in the UK or some other developed nations. Nowadays, the role is reversed since I came to live in the UK and experienced the current crisis on a first-account basis while my friends and family watch with worry back home. Therefore, to get rid of rumours and inform you of the nature of this crisis, I will paint you a picture of how other people and I in Glasgow currently cope with it.

Inflating Prices

Nobody is lying when they say that prices have been rising drastically because the same is true for most economies in the world. Some economists blamed supply-side issues as one of the culprits for this worldwide economic inflation. However, unlike Indonesia, which relies on coal-fired power, the UK’s national grid is mainly powered by gas, which has suffered a severe supply shock due to the Russia-Ukraine war.

Moreover, the UK’s energy sector is wholly privatised, which has reduced the UK Government’s ability to impose a more hands-on pricing policy. Accordingly, to cover costs, those private energy companies then increase prices for their energy, which naturally drives up consumer prices even more. Therefore, As proof of the maddening rise of consumer prices in the UK, I will show you the amount I paid for some of my frequently bought groceries.

Earlier this year, I thought prices had increased faster than expected since I came to the UK in December 2020. Hence, I registered for a loyalty program at my go-to discount supermarket to save up on groceries. Coincidentally, every time I scanned my loyalty app, they saved my receipt digitally, which prompted me to check on how prices have increased. To my shock, some of my regular buys have risen drastically.

For example, I usually buy spring onions because this particular grocer sells them the cheapest in the market; however, their prices have increased by 32% since February! Besides, we must remember that supermarkets often reduce the quality of their goods to stay competitive. Because, from my observation, the grocer I went to has dramatically reduced the standard of some of their products. Hence, actual prices should have been much higher.

Stagnating Economy

Another point that the viral news addressed is the report that the UK economy is struggling. They have reported that shops in the UK are closing en masse due to waning business. I agree with their store closure statement because I witnessed how shops in Glasgow are struggling to reopen post-pandemic. Even prominent chains like Sports Direct and M&S are closing their shops on a major street in Glasgow’s city centre. However, many new businesses have also opened shops, especially eateries and Asian groceries located in student-prominent areas such as the West End.

If we look into the phenomenon nationally, store closures are indeed a problem during the pandemic, as reported by the BBC. Nevertheless, shop closures have slowed to their lowest level in seven years, while shop openings have kept a steady downtrend. Therefore, the argument for a weakening UK economy based on shop closures alone is unwarranted. More accurately, the nation’s economy is weakening because of output underperformance in the production and services sector. The Office of National Statistics (ONS) of the UK notes that mining, health services, and the entertainment industry are contributing the largest to decreasing economic output of the nation.

Inflating Electricity Prices

Electricity prices have increased by 54% in the 12 months to August 2022. The consumer price inflation (CPI) report by ONS shows that this increase has lowered the demand for energy by 2.4% compared to August last year. Such low demand shows how consumers adjust to increasing energy prices by consuming less electricity. Considering how essential the electricity bill is to a typical UK household, weakening output in entertainment should be predictable due to shifting consumer priorities. On the other hand, low mining and health services production is trickier to understand.

The ONS found that the extraction of crude petrol and natural gas is the primary driver of the sector’s lacklustre output, while health services are driven by waning test and trace measures of COVID-19 in the UK. Moreover, Putin has made his intention clear during the Russia-Ukraine war. He intends to make the ‘western world’ bleed for denying his ambition to conquer Ukraine by reducing their gas export to Europe and the UK. Russia’s reduced gas export then increased UK’s electricity prices and reduced their gas extraction output.

The UK’s cost of living crisis is caused by supply-side pressure and increasing electricity prices due to the Rusia-Ukraine war in Europe. Rumours about the weakening UK economy because of shop closures are unwarranted, and the people of Glasgow are coping with the crisis by shifting consumption to prioritise their electricity bills.