But last year saw a steady stream of much anticipated sequels, such as Halloween Kills, Ghostbusters: Afterlife and Spider-Man: No Way Home.

In the economics world, there are plenty of sequels too, whether it be stock market crashes, recessions, or financial crises. Invariably, with economic sequels there are similarities with the original, but there can also be notable differences.

The latest economic blockbuster doing the rounds is The Cost-of-Living Crisis 2. This is the sequel to the living standards squeeze that took place between 2008 and 2014, and gave us austerity, benefit freezes, pay caps and consumer price inflation significantly outpacing pay growth.  

The present-day sequel sees households being hit with inflation rates not seen in several decades, soaring food and energy prices, housing becoming less affordable, and incomes being squeezed. 

UK consumer price inflation (CPI) reached 5.4% year on year in December – the highest rate since March 1992 (+7.1% year on year). UK inflation had peaked at 8.4% in April and June of 1991. 

Consumer goods inflation (+6.9% year on year) is running at twice the rate of consumer services inflation and is at its highest rate since July 1991 (+7% year on year). Goods inflation is expected to breach its record high of 7.4% year on year (Sep/Oct 1990) in the coming weeks. 

Consumer services inflation (+3.4% year on year) is at an eight-and-a-half-year high. By comparison, consumer services inflation was running into double digits in late 1990 and 1991, peaking at 12.1% in April 1991. Services inflation will be closely watched in the coming months as the strength of pay settlements will feed into this measure. Wage increases will also filter through into the cost of consumer goods.  

The acceleration in food price inflation is particularly concerning for those on lower incomes. Food prices recorded their biggest monthly rise in nine years in December (+1.4%) with the annual rate of inflation jumping from 2.4% in November to 4.5% in December. The latter represents the steepest rise in over eight years. Bread and milk prices are running at 4.4% year on year while those with a penchant for ready meals will note that prices have soared by close to 12% over the past 12 months.

Consumer prices are set to rise considerably higher in 2022, pushing the headline CPI annual inflation rate towards 7% in April. It is worth remembering that September’s CPI rate (3.1% in 2021) is used to set the increase in benefits, such as Universal Credit payments.  

The majority of people working are unlikely to see wages keeping up with inflation and will therefore also see a significant fall in their standard of living. Tax rises will be the other element of this squeeze. National Insurance contributions are set to rise by 1.25 percentage points in April while income tax thresholds will be frozen for four years. 

December saw the Bank of England perform its first rate rise in three years and we saw a further rise in early February, with at least one more expected this year. 

Inflation hits those on lower incomes disproportionately hard and, as illustrated in the last cost-of-living crisis, Northern Ireland fares worse than other UK regions. It has the UK’s highest proportion of low-paid jobs (almost one in five), the lowest discretionary disposable income, and local households spend disproportionately higher amounts of their income on energy, food and fuel relative to the rest of the country. 

During the noughties, pay rises consistently outpaced inflation, effectively providing NI and UK workers with a better standard of living. But the global financial crisis led to a huge cost-of-living downturn, with the median annual wage of a private sector full-time worker in Northern Ireland falling by 12% in real terms between 2008 and 2013 – a fall of £3,000 per full-time worker. 

Increased taxation will squeeze incomes too. This is a key difference with the last cost-of-living crisis. The planned 1.25 percentage point increase in employees’ and employers’ National Insurance contributions from April 2022 will see an individual on £20k, £30k and £50k pay an additional £130, £255, and £505 respectively. 

The four-year freeze on the personal income tax allowance and higher-rate (40%) thresholds will also mean higher tax contributions – and lower disposable incomes. 

On a negative note, the last cost-of-living crisis was in a pre-Brexit environment.  

The NI Protocol has already provided significant benefits to many local companies. But the ‘best of both worlds’ narrative wrongly suggests that the new arrangements are problem free. 

The access to both markets is helpful, but Brexit – and its outworking through the protocol – adds new regulations, bureaucracy and costs. The sea border is not the best of any world; it is a vehicle to deliver Brexit. 

And while Brexit’s costs are well known, they haven’t fully arrived yet. When they do, businesses will pass these on to consumers. Remember, consumer spending accounts for around 75% of Northern Ireland GDP, and anything that adds to the cost of consumer goods will have significant impact on NI’s economic growth.

So, The Cost-of-Living Crisis 2 will be coming to a household near you soon. And, while 2022 could be a good year for the film industry, it will very likely be another year to forget for many others. 

A version of this article first appeared in The Irish News.