Domesday Live

Why are prices rising?

Prices rise when it costs businesses more to make and sell things, or when people have more money chasing the same goods. The surge from 2021 came mainly from energy and food costs and supply problems, then pay rises and businesses passing on costs kept it going.

Why it happens

• Energy and food costs jumped. Wholesale gas prices soared in 2021 and 2022, especially after Russia invaded Ukraine, which raised bills and the cost of making and moving almost everything.
• Supply problems after the pandemic. Factories and shipping restarted unevenly, so goods were scarce and prices rose.
• Pay and demand. Employers short of workers raised pay, and firms passed some of their higher costs on. Services such as restaurants and insurance, where wages are most of the cost, kept rising longer.
• A weaker pound. When the pound falls, imported goods cost more. Much of what the UK buys, from food to fuel, is priced in other currencies.