The UK is currently in the midst of a deep cost of living crisis, the likes of which has not been seen since the 1970s. Inflation is running at 5.5% according to the most recent available data. 81% adults surveyed told the Office for National Statistics that the cost of living had risen over the previous month, an increase of 19 percentage points on November 2021.

This inflationary crisis is being driven largely by rising energy prices: the legacy of lockdowns during which economic activity fell, alongside demand for energy, reducing fossil fuel prices to near zero and discouraging further exploration and extraction.

When prices started to rise, many of the big oil companies opted to distribute cash to shareholders rather than either invest in production or diversify their operations away from fossil fuels (as many have promised to do). After announcing a bumper year for profits in 2021, Exxon Mobil embarked on a $10 billion share buyback programme.

Rising energy prices have fed through to higher prices across the board because fossil fuels are needed to produce and transport almost every commodity. The effect is particularly obvious in highly import-dependent economies like the UK’s.

But the hydrocarbons found in fossil fuels are also used directly in the production of many commodities like plastics and, more importantly, in agriculture. Most fertilisers are derived from natural gas, which goes some way to explaining the sharp increase in food prices seen over the last few months.

Other factors, like supply chain blockages, are exacerbating the problem. The complex and highly interconnected system of global shipping ground to a halt during the pandemic, leading to a shortage of containers and hundreds of ships piling up outside ports unable to dock. Add in war and climate breakdown—both of which are making it harder to produce and export primary commodities like grain and oil—and you have a perfect storm.

As Rupert Russel points out in his most recent book Price Wars, these events are not reflected by rising prices through some natural, uncontrollable transmission mechanism. Commodities prices have been rising for months now as speculators in London and New York predict—and profit from—post-lockdown shortages and mounting geopolitical tensions.

The predictions made by commodities traders create a positive feedback loop, whereby rising commodity prices create the very economic and political turmoil the speculators predicted. Rising energy prices, for example, have made it much harder for western states to sanction Russian energy exports.

While fossil fuel executives and commodities traders are profiting from the pervasive volatility and uncertainty in commodities and financial markets, millions of people around the world are struggling to survive.

For many years now, inflation has seemed like something of an academic concern. In the Eurozone, policymakers have been more worried about deflation than rising prices. So post-lockdown debates on rising prices have often seemed pretty abstract.

But inflation is now back with a bang, and it’s pushing millions of people into poverty. In the UK, 22% of people admit to diving into their savings in order to pay for essentials, and 21% people under 50 say they’ve taken out more credit card debt simply to get by. Survey data reflects the macroeconomic picture, with households reporting rising food, electricity and fuel prices as the most significant factors driving up costs.

The situation is even worse for young people, who have been more affected by stagnant wages and rising unemployment because they are more likely to be in work and reliant on income from wages (rather than from assets). Those who join the labour market during a recession like this one find their early years of work much harder and experience a lifetime ‘scar’ on their earnings as a result.

They’re also more likely to be living in expensive rented accommodation, which eats up on average around third of their take home pay—and far more in London. Young people are less likely to have savings to use to cover these costs, which leaves them dependent upon debt to make ends meet. If interest rates rise in response to rising inflation, these young people will be punished even further.

But it is the poor—of all ages—who are going to be most affected by rising prices. Many are living in insecure rented accommodation, in low-wage, insecure work, and dependent upon social security and high interest debt just to get by. If Rishi Sunak does remove the £20 uplift in Universal Credit alongside an increase in interest rates, many will be pushed into poverty and homelessness.

When you account for the fact that these pressures are global—the IMF found average food inflation was running at nearly 7% in December—the picture is even bleaker. Rising food and fuel prices are going to push some of the poorest people on the planet even further into poverty. According to the World Food Programme, 2021 saw an unprecedented increase in global hunger and food prices.

Politicians may now feel like they can blame the war in Ukraine for rising prices and encourage a kind of blitz spirit whereby people accede to some degree of suffering in solidarity with the ‘war effort’.

But, as is always the case during war time, only the working classes are going to be asked to make sacrifices. The wealthy are going to continue to profiteer from the chaos, while the media distract us with op-eds on how we should ban Tchaikovsky and carpet bomb Eastern Europe.