Inflation rates mean people are expecting everyday items – from pints to groceries – to reach unaffordable prices soon, if they haven’t already.
With inflation at 10.1% and rising (potentially to more than 18% come January), the cost of living crisis looks set to worsen over the winter.
While newly-appointed prime minister Liz Truss has promised to introduce help for energy bills this week, she has not shared any details just yet.
With no scheme in place right now to halt inflation, there’s been widespread speculation that goods, such as a pint of beer, could reach a whopping £20, having previously been somewhere in the range of £5.
But, here’s why some people think that will never happen.
Why are prices rising in the first place?
The cost of wholesale gas is rising globally (due to a range of factors, including Russia’s war in Ukraine), meaning energy suppliers have to pay more to get the same quantity of energy.
This cost is then being passed onto consumers, although households are slightly protected by the energy price cap set by regulator Ofgem.
Even this is expected to increase to £3,549 come October 1, an 80% increase on the current cap, which will push millions of poorer households into fuel poverty this winter.
However, it’s even worse for some smaller businesses, as they do not have the protection from an energy price cap. Some pubs or restaurants have seen their energy bills sky rocket far beyond 80%, reaching a 500% or 600% increase instead.
People have subsequently expressed fears that this extra price will also be passed onto the consumers – potentially leading to £28 for a single cup of coffee, or £102 for a packet of Marlboro light cigarettes, especially if inflation starts to rise with the price of wholesale gas.
So, could this really happen?
No – businesses would be more likely to go bust than to raise their prices by 500% or 600%.
As Tom Stainer, the chief executive of the Campaign for Real Ale (Camra) told the Daily Star: “What you can say with surety is you can’t possibly pass on these energy increases and you can’t increase the pint by 500%.
“It just isn’t viable for pubs to pass (on such prices) to consumers because people wouldn’t come drink at pubs anyway.
“So thousands [of pubs] could be affected by this. And they can close – and the difference with other sorts of business is once a pub closes it very rarely comes back.”
Stainer also referred to a Camra survey from the summer which found more than 50% of Brits think the cost of a pint is already unaffordable.
Have closures already been happening?
Yes – and not just to smaller, independent places. Craft beer brewer, BrewDog, has closed six of its pubs over the energy bills increase, dubbing the government “clueless” for its inaction.
Six of the UK’s largest pub and brewing companies have also called on the government in an open letter to avoid “real and serious irreversible” damage to the sector by stepping in to reduce energy bills.