UK households face biggest fall in living standards since 1950s, say experts

theguardian.com:

UK households could suffer the biggest annual decline in their living standards since the 1950s as the Russian invasion of Ukraine pushes up global energy prices, experts have warned.

With inflation already at the highest rate for 30 years, analysts said a sustained rise for wholesale oil and gas markets would further add to the squeeze on families from soaring utility bills.

Analysts at Bank of America said that under such a scenario household real income could plunge by 3.1% in 2022 compared with a year earlier, in the biggest annual drop since at least 1956, the year of the Suez crisis.

In what would mark a worse squeeze than during the oil shock of the 1970s, it comes after wholesale European gas prices rocketed on Thursday after Russian tanks rolled over the border in a full-scale invasion.

Although gas prices fell back on Friday on a calmer day for financial markets, analysts warned they remained higher than the start of the week and could surge higher again should tensions between Moscow and the west escalate further.

European stock markets closed higher on Friday with the FTSE 100 up 260 points, or 3.6%, while commodity prices reversed some of Thursday’s leaps. The oil price fell back from almost $106 per barrel to about $98, while wholesale gas prices dropped from 350p per therm to about 250p.

However, this week’s increases have fed through to petrol and diesel prices at filling stations across Britain. The RAC said prices rose to new record highs for the fourth time this week, with unleaded at almost 150p per litre and the price of diesel above 153p for the first time ever.

It comes with inflation already at the highest level since 1992, having reached 5.5% last month as the world economy grapples with the fallout