If you think consumers are the only ones that are being affected by the current economic recession and rising inflation in the United Kingdom, think again. The higher cost of living and conducting business is starting to affect certain segments of the economic market, both on a private and professional level, and how they are going to cope during this financial crisis will be based on how well they have prepared for any eventuality.

According to a report from the Institute for Fiscal Studies (IFS), many different parts of society are being affected by the rising cost of living that includes increased food prices, higher petrol costs, and increased utility tariffs. Older and poor households are typically the ones that are affected the worst during times of high inflation and recession, but this current recession is starting to also adversely affect the lower-to-middle income bracket households as well.

The IFS report is considered an ‘average' representation of how these different market segments are faring during the recession and the high rates of inflation. Each household handles financial situations such as this differently, with different rates of inflation affecting their own finances in ways that may not be hurting their neighbours. How inflation affects a household is based on the type of goods and services they buy on a regular basis and whether or not these particular items have been the victims of price increases.

The survey by the Institute for Fiscal Studies results are supported by a wide ranging breakdown of individual categories that cover everything from goods to services. In the last year alone they discovered that consumers have experienced a reduction in what they spend on private transportation (9.1%) and housing (8.1%) even with petrol prices soaring and the housing market collapsing. Consumers who have used public transportation, however, have seen an increase in the amount of money they are spending by 10.2%, and those households that have been heating their homes with household fuel have been spending 35.1% more on their heating costs.

These numbers actually reflect how some consumers are facing additional and higher debt risks than others. A good example is the consumer who owns their own vehicle. While gas prices were higher over the summer of 2008, many of these people actually were able to see a reduction in their cost of living expenses when the petrol prices fell to more reasonable levels. Public transportation services still have to charge higher fares to compensate for the still elevated petrol prices, leaving the average consumer spending more each month on transportation than those with their own vehicle.

Consumers and businesses are looking for ways to reduce their costs while still staying above the proverbial water line and keep their businesses running without having to file for bankruptcy, IVA or the new debt relief orders that will be available for individuals after April 6, 2009. They may have to get used to cutting corners for a while, as currently there is no end in sight to the global financial crisis and recession that has gripped the United Kingdom.