London Daily

Focus on the big picture.
Sunday, Feb 25, 2024

Inflation, gas prices, cost of living crisis and a plummeting pound - a look back at a tough 2022

Inflation, gas prices, cost of living crisis and a plummeting pound - a look back at a tough 2022

It has been an extraordinary year - which begs the question when we come to look at the defining charts of 2023, will they be quite as dramatic as these ones?

When looking back at the year gone by, it is rather hard to know where to start.

The death of a monarch, war in mainland Europe, the shortest running prime minister of all time. It has been an extraordinary 12 months of news, especially for the economy. Rather than running through the whole thing in narrative form, here are four of the biggest stories - along with the charts that help tell them.

1. The return of inflation

That 2022 was going to be a year with high inflation was hardly a surprise. It was clear from the middle of last year that prices were on the rise, and by the time the Bank of England began raising interest rates in December 2021, it already looked slightly behind the curve.



All the same, the leap in prices in 2022 was both dramatic and historic. You can see it for yourself in the chart of the period. By October, the consumer price index (CPI) was telling us that prices were rising at an annual rate of 11.1 per cent - the highest rate since 1981.

The striking thing about high inflation is how quickly it feeds into one's way of life. There is the big picture: the fact that we're all worse off, because our earnings aren't rising at the same rate. There's the impact it has on businesses, who are seeing their margins compressed and having to wrestle with how much of their cost increases to pass onto customers. And then there are the knock on consequences we're still living through.

One of those consequences is a sharp increase in industrial action. The funny thing, when you look at the shape of that CPI chart, is how similar those lines are to another data series - the one showing the frequency of industrial action in this country. The UK lost well over a million working days to strikes towards the end of 2022 (the final figure will be considerably higher, when it eventually gets published).


But when you overlay those two data series, you can see that given where CPI rose to and given the relationship between these two lines in the past, the number of strikes seems likely to head far higher.

The good news is that as the year ended, inflation seemed to have peaked. The question is what happens to energy bills and wider household costs in the coming months.

2. Gas prices


Speaking of energy bills, it's worth dwelling for a moment on the extraordinary increase in gas prices in 2022. We have simply never seen these prices rise this high - ever.


One thing worth noting is that the increases, from a relatively low and stable level back before 2020, long preceded the war in Ukraine. There is no doubt that the Russian invasion caused a sharp spike in prices, but this was far from the only thing pushing up these prices.

But we have all suffered the consequences. Not just in our energy bills - though that's the most obvious and painful impact - but everywhere else too. One thing we've all had to go back to basics and try to understand this year is the extent to which so many parts of our lives, so many products we all use, are made in part with gas, from the tomatoes you buy in the supermarket to the technology products you have in your pocket. Even a new car relies on gas to dry the paint being applied to it. For the time being, we still live in a fossil fuelled world, so for the time being, charts like this will have an enormous impact on our lives.

3. Real household disposable income


The upshot of those higher prices, however, is a severe hit to our living standards. Perhaps the clearest way to see this is to calculate the disposable income we all have after you've subtracted inflation and essential items from our income.


And on this front the news is not good. This chart, originally produced by the Office for Budget Responsibility first in March and then again in November, shows you how that real household disposable income has changed - and is forecast to change. And due in large part to the cost of living crisis, this measure of our living standards is due to shrink this year and next at the fastest rate ever. It's a chilling calculation, underlining something quite important.

While we have lived through more recessions in recent years than anyone cares to remember, this particular recession may prove more painful, and is likely to be felt more intimately in our pockets, than any of those preceding slumps. Such things matter.

4. The pound hits a record low


Finally, it would be remiss to offer an account of the year without referring to the drama of September and October, when Liz Truss and Kwasi Kwarteng presided over a fiscal statement that precipitated an astounding collapse in the value of the pound.


In the days after the statement, sterling dropped sharply in value, eventually hitting a low of just above $1.03 vs the US dollar. This was the lowest level on record, lower even than the levels in 1985 which marked the previous nadir. In that case, the story was primarily about the dollar's strength - a phenomenon which so worried the US authorities that they staged a summit, the Plaza Accord, in an effort to bring it down against other leading currencies.

This time around, the story was slightly different. The dollar was undoubtedly strong in the preceding weeks, with economists expecting big increases in the main US interest rate, but the real story was about UK weakness. With consternation among UK investors about the course of policy under Truss and Kwarteng, the pound dropped not just against the dollar but against other currencies too. And after Truss was replaced with Rishi Sunak, it began to bounce back.

These are just small data-driven windows into an extraordinary year. But they raise a question: when we come to look at the defining charts of 2023, will they be quite as dramatic as these ones?

Newsletter

Related Articles

London Daily
0:00
0:00
Close
London's Iconic British Telecom Tower Sold To Become Hotel
You Are So Beautiful
Ukraine Arrests Father-Son Duo In Lockbit Cybercrime Bust
Postmodern Jukebox European Tour Version
US Offers $15 Million For Info On Leaders Of Cybercrime Group Lockbit
An old French tune (by Georges Brassens) Pomplamoose ft. John Schroeder
Russia Claims UK Cultural Agency Spied for Ukraine
Sattahip Motor Show 20
Apple warns against drying iPhones with rice
SONATE AU CLAIR DE LUNE - Moonlight sonata
Alexei Navalny: UK sanctions Russian prison chiefs after activist's death
A kiss to build a dream on
German economy is in 'troubled waters' - ministry
Wonderful Tonight - Eric Clapton (Boyce Avenue acoustic cover)
In a recent High Court hearing, the U.S. argued that Julian Assange endangered lives by releasing classified information.
Mean Blues
New video
La Chansonnette
Tucker Carlson says Boris Johnson wants "a million dollars, in Bitcoin or cash, from Tucker Carlson to talk about Ukraine.
Pattaya Addicts
Russia is rebuilding capacity to destabilize European countries, new UK report warns
Franz Liszt - Liebestraum - Love Dream
EU Commission wants anti-drone defenses at Brussels HQ
Dream a little dream of me
Von der Leyen’s 2nd-term pitch: More military might, less climate talk
Unchained Melody sung like you've NEVER heard!
Global Law Enforcement Dismantles Lockbit Ransomware Operation
Dave Brubeck - Take Five
Prince William Urges End to Gaza Conflict
Édith Piaf - Non, Je Ne Regrette Rien (Sofie)
UK court to hear Assange's final appeal against extradition to the US, where he faces charges related to his journalistic work—the publication of a classified video in 2010 that exposed US war crimes against humanity.
Rondo Alla Turca
About 50-60% kids either chose to be YouTuber or influencer
Kiss of fire
A viral video of Nationals MP Barnaby Joyce lying on a Canberra footpath is celebrated by his media mates.
Tom Jones - I´ll Never Fall In Love Again 1967, 1989, 2001
European Countries React to Navalny's Death by Summoning Russian Diplomats
Israel Cachao López - Guajira Clásica
Israel has gone ‘beyond self-defence’ in Gaza, says Labour’s Streeting
Edward Maya - Stereo Love (feat. Vika Jigulina) (Extended Mix)
English farmers to be offered ‘largest ever’ grant scheme amid food security concerns
Strauss - Radetzky March - Karajan
Cameron government knew Post Office ditched Horizon IT investigation
La vie en rose
EU Calls for Immediate Ceasefire in Gaza Conflict
The Temptations - My Girl (Smokey Robinson Tribute) 2006 Kennedy Cent
EU Vows To Hold Putin "Accountable" After Meeting Alexei Navalny's Wife
Orlando Cachaito Lopez Redencion
EU Launches Probe Into TikTok Over Child Protection Under Digital Content Law
Edith Piaf - NON, JE NE REGRETTE RIEN
The EU Initiates Naval Mission to Defend Red Sea Trade Routes
RADETZKY MARCH-2008-Wien, New Year Concert
EU and UK Announce Joint Effort on Migration
Only you (And you alone)
Brazil's Lula Likens Gaza Operation to Holocaust, Israel Says "Red Line" Crossed
Strangers In The Night
Ministers Confirm Proposal to Prohibit Mobile Phone Usage in English Schools
Charles Aznavour - La Boheme
Microsoft-backed OpenAI valued at $80bn after company completes deal
Summer time
‘Alexei would want to tell Russia not to give up fighting’
Sting and Stevie Wonder - Fragile (from Sting's 60th birthday concert)
Rwandan Footballer's Dismissal Sparks Concerns Over UK Asylum Plan
Aux Champs Elysees
Whisky Challenges China's Baijiu Market During New Year Celebrations
Stand By Me - Ben E. King (Boyce Avenue acoustic cover)
Avdiivka - Symbol Of Ukrainian Resistance Now In Control Of Russian Troops
La Mer (Beyond the Sea) – Avalon Jazz Band
Putin Critic Alexei Navalny's "Killers" Refusing To Hand Over Body, Say Allies
She
"Historic Step": Zelensky Signs Security Pact With Germany
Nathalie Song by Enzo Petrachi Stjepan Hauser Cello
"Historic Step": Zelensky Signs Security Pact With Germany
Shape of My Heart - Sting (Boyce Avenue acoustic cover)
20 Tech Giants Sign Effort To Fight AI Election Interference Across Globe
Radiohead - Creep
Joe Biden Accuses Putin of Causing Navalny's Death
Quizás,Quizás,Quizás - Andrea Bocelli - Jennifer Lopez
Russian opposition leader Alexey Navalny has died at the Arctic prison colony
Perhaps, Perhaps, Perhaps - Multi-Couples
Tucker Carlson grocery shopping in Russia. This is so interesting.
Pentatonix Havana
Julian Assange's Wife Warns of His Death if Extradited to US
Paula Cole - Autumn Leaves
‘A lot higher than we expected’: Russian arms production worries Europe’s war planners
Oscar Benton Bensonhurst Blues
Greece Legalizes Same-Sex Marriage and Adoption Rights
OH NANANA vs ABUSADAMENTE
Hungarian Foreign Minister: Europeans will lose Europe, the Union's policy must change drastically
Nina Simone - ”I Put A Spell On You”. Vezi aici cum cântă Jeremy Ragsd
In Britain Homeowners are receiving CPO’s (Compulsory Purchase Orders) so their homes can be redistributed to migrants
NIGHTWISH - The Phantom Of The Opera
Microsoft says it caught hackers from China, Russia and Iran using its AI tools
Motorshow 2016 Tanjay Negros Oriental
Influencers Exploit X Platform for Profit Amidst Israel-Gaza Conflict
Monica Bellucci - Ti Amo
Former Dutch PM And Wife Die "Together Hand In Hand" Via Duo Euthanasia
Michael Jackson - Billie Jean Milena The Voice France 2018
Media Giant Paramount Global, Which Owns CBS News, To Cut 800 Jobs
Michael Buble (Help Me Make It Through The Night) feat Loren Allred
Memories Canon In D - Maroon 5 (Boyce Avenue piano acoustic cover)
Matteo Simoni - Marina
Maroon 5 - One More Night
Maroon 5 - Memories
Mark Knopfler - Brothers In Arms (Berlin 2007 Live)
Mark Knopfler & Emmylou Harris - Romeo And Juliet (Real Live Roadrunni
Marina, Marina - The LUCKY DUCKIES intimist live concert at Guimarães
Major Lazer & DJ Snake – Lean On Mauranne The Voice France 2016
Love Theme from Romeo and Juliet - Joslin - Henri Mancini, Nino Rota
LoLa & Hauser - Love Story
Linkin Park Jay-Z - Numb Encore (Live 8 2005)
Hallelujah Mennel Ibtissem, The Voice France Leonard Cohen
Leonard Cohen - Dance Me to the End of Love
Leonard Cohen & Natasha Rostova - Dance me to the end of love
La casa de papel - Bella Ciao
La Camisa Negra
L'italiano (Toto Cutugno) - The Gypsy Queens
Juanes - La Camisa Negra
Jonathan and Charlotte - Britain's Got Talent 2012 Live Semi Final - U
John Powell - Assassin's Tango
Joe Cocker - You Can Leave Your Hat On (LIVE in Dortmund)
Joe Cocker - Unchain My Heart 2002 Live
Joe Cocker - A Whiter Shade Of Pale
Jay Z & Alicia Keys - Empire State of Mind LIVE
Jason Mraz - Im Yours (live)
Jarrod Radnich - Bohemian Rhapsody - Virtuosic Piano Solo
James Blunt - You're Beautiful
James Blunt - You're Beautiful & Bonfire Heart (Live at The Nobel Peac)
If You Go Away - Helen Merrill & Stan Getz (Tribute to Virna Lisi)
I'LL BE MISSING YOU
I Say a Little Prayer
Hotel California ( Eagles ) 1994 Live
Historia de un amor - Luz Casal. Vezi interpretarea Biancăi Sumanariu
Here Comes The Sun - The Beatles (Boyce Avenue acoustic cover) on Spot
Heart - Stairway to Heaven Led Zeppelin - Kennedy Center Honors
HAVANA by Camila Cabello Zumba Pre Cooldown TML Crew Kramer Pastra
HAUSER and Señorita - I Will Always Love You
HAUSER - Waka Waka
HAUSER - Sway
HAUSER - Lambada
HAUSER - Historia de un Amor
HAUSER - Despacito
Great Pretender
Georgia May Foote & Giovanni Pernice Samba to 'Volare' - Strictly Come
Gary Moore - Still Got The Blues
GIPSY KINGS VOLARE Penelope Cruz
Fugees - Killing Me Softly With His Song
French Latino - Historia de un Amor
For A Few Dollars More The Danish National Symphony Orchestra (Live)
Flashdance • What a Feeling • Irene Cara
Filip Rudan - “Someone You Loved” Audicija 4 The Voice Hrvatska Sez
Eric Clapton - Wonderful Tonight
Enya - Only Time
Enrique Iglesias - Bailando (English Version) ft. Sean Paul
Enrique Iglesias - Bailamos
Elena Yerevan Historia de un amor
Ed Sheeran - Shape of You (Official Music Video)
Ed Sheeran - Perfect Symphony [with Andrea Bocelli]
Ed Sheeran - Perfect (Official Music Video)
Easy On Me - Adele (Boyce Avenue 90’s style piano acoustic cover) on S
ERA - Ameno
ELENA YEREVAN- Cancion Del Mariachi-IN STUDIO-2017 DPR
Dust In The Wind - Kansas (Boyce Avenue acoustic cover)
Don't Let Me Be Misunderstood
Despacito x Shape Of You - Pentatonix
Deep Purple - Child In Time - Live (1970)
David Foster When A Man Loves A WomanIt's A Mans World (SealMichael Bo
Dance me to the end of Love ( Pi-Air Design )
Coolio - Gangsta's Paradise (feat. L.V.) [Official Music Video]
Conquest Of Paradise (Vangelis), played on Böhm Emporio organ
Cielito Lindo
Chico & The Gypsies - Bamboleo
Canción Del Mariachi - Antonio Banderas, Los Lobos • Desperado
Camila Cabello - Havana (Audio) ft. Young Thug
Camila Cabello - Havana ( cover by J.Fla )
California Dreamin' - The Mamas & The Papas José Feliciano (Boyce Ave
Buster Benton - Money Is The Name of The Game
Hallelujah Pentatonix
Bobby McFerrin - Don't Worry Be Happy (Official Music Video)
Bob Dylan - Knockin' On Heaven's Door Emilia The Voice Kids France
Besame Mucho - Cesaria Evora
Ben E. King - Stand by Me Sax Cover Alexandra Ilieva Thomann
Bella Ciao
Bella Ciao - INSTRUMENTAL
Beautiful in White x Canon in D (Piano Cover by Riyandi Kusuma)
Bad Romance - Vintage 1920's Gatsby Style Lady Gaga Cover ft. Ariana Savalas & Sarah Reich(1)
BELLA CIAO 2020 - KARAOKE ITALIANO
BAMBOLEO - Gipsy Kings • Antonio Banderas, Katya Virshilas
BAILANDO (original)
Awesome Ukrainian yodeler - SOFIA SHKIDCHENKO (with English subtitles)
Avicii - The Nights
Atom - The Great Gig in the Sky
Aretha Franklin - (You Make Me Feel Like) A Natural Woman (Official Ly
Antonio Banderas - Cancion del Mariachi (Desperado)
André Rieu - Zorba's Dance (Sirtaki)
André Rieu - Can't Help Falling In Love
André Rieu & Mirusia - Ave Maria
Andrew Reyes Elton John - Don't Let The Sun Go Down The Voice 2020 (
Andreas Kümmert Whiter Shade Of Pale The Voice of Germany 2013 Showd
And I Love You So
All About That Bass - Postmodern Jukebox European Tour Version
Alan Walker - Faded (Piano Cover)
Ain't No Sunshine -- Bill Withers (cover by Canen 12 y.o.)
African music
Adriana Vidović - “Creep” Audicija 4 The Voice Hrvatska Sezona 3
Adriana Vidović - “Believer” Nokaut 3 The Voice Hrvatska Sezona 3
A Fistful of Dollars - The Danish National Symphony Orchestra and Tuva
4 Beautiful Soundtracks Relaxing Piano [10min]
2CELLOS - Whole Lotta Love vs. Beethoven 5th Symphony [OFFICIAL VIDEO]
2CELLOS - Smooth Criminal (Live at Suntory Hall, Tokyo)
2CELLOS - Smells Like Teen Spirit [Live at Sydney Opera House]
2CELLOS - Despacito [OFFICIAL VIDEO]
13 Year Old Girl Playing Il Silenzio (The Silence) - André Rieu
094.All About That Bass
00 - SADNESS PART 1
(Ghost) Riders In the Sky (American Outlaws Live at Nassau Coliseum, 1
(Everything I Do) I Do It For You - Bryan Adams (Boyce Avenue ft. Conn
What a wonderful world
Moon river
×