Global influences on the cost of a minimum standard of living in the UK

In recent years, relatively large increases in the price of food, domestic energy andsome other essentials have caused the minimum cost of living to rise faster than thegeneral inflation rate. This creates an important domestic issue: how to prevent a fallin living standards for disadvantaged groups whose incomes are often linked togeneral inflation but whose living costs are rising faster than this. But it also raisesquestions about the role of global influences on economic disadvantage in the UnitedKingdom. The global cost of commodities and of imported consumer goods todayhave important impacts on the price of essentials. This paper explores ways in whichthis might affect the future ability of households in the UK to afford a minimumacceptable standard of living.This question can be addressed through the Minimum Income Standard (MIS), ameasure of how much money households in the UK need in order to reach aminimum acceptable standard of living, based on what members of the public think.An examination of the main areas of spending that comprise this standard showswhich have been the main drivers in recent years of rises in essential living costs,susceptible to global influences on price. This analysis identifies three suchcategories in particular: food, domestic fuel and clothing.The price of these items in the UK is being influenced by a long-term rise in worlddemand for commodities, and by limits to global energy use related to the supply offuels and efforts to contain their impact on the environment. These factors havedriven a general increase in food and fuel prices, especially since 2007, and arelikely to push these prices higher in the future. However, world commodity prices arealso highly volatile, partly because of fluctuations in world demand but also becausethe prospect of large price hikes has attracted speculation, which can sometimesaccentuate price movements. UK consumers have been protected from theextremes of commodity price movements, but nevertheless could in future faceuncertainty over the price of essentials that makes it harder for those on low incomesto budget. (Continues...).