In a recent analysis, it has been found that individuals may need up to an additional $15,000 per year to maintain the same standard of living they had in 2021. The escalating cost of living, due to significant inflationary pressures affecting various sectors of the economy, is the root cause of this change. Essential goods and services, including food, housing, healthcare, and other necessities, have seen price hikes leading to this spike in cost.
The Global Inflationary Impact
Zurich has surpassed New York, becoming one of the two most expensive cities to live in 2023 according to the Economist Intelligence Unit (EIU). The report, which examined the prices of hundreds of goods and services across 173 major cities, highlighted that the world’s biggest cities were defined by soaring inflation for a second year in a row as prices rose on average by 7.4%. The increasing cost of living, particularly in rent and transport, has pushed people further from work, amplifying their daily expenses.
American Inflation and Living Expenses
The surge in inflation over the past year has prompted numerous Americans to contemplate relocating to states with more affordable living expenses. The U.S. Federal Reserve, in a bid to counter the rampant inflation, escalated the benchmark interest rates by 450 basis points from March 2022 onwards. This resulted in a drop in gasoline prices, bringing them back to the levels that prevailed in 2021. However, the U.S. population aged 65 and over, which has soared by 34% in the last decade, faces the twin challenges of securing affordable housing and long-term care (LTC) services, with costs averaging over $100 per day nationwide.
Global Cost of Living Crisis
The cost of living crisis is not confined to the U.S. alone. The UK and many other countries are also grappling with rising food and energy prices. The conflict in Ukraine has added to the inflationary pressures, with the UK experiencing a 9.6% rise in the prices of consumer goods and services in the year to October 2022, the fastest rate in four decades. A recent survey reveals that 62% of adults in Great Britain are spending less on non-essentials due to the rising cost of living. Despite a moderate fall in inflation, the global cost of living crisis remains unresolved, making it challenging for consumers to adjust and maintain their purchasing power.