The gap in inflation experienced by Britain’s richest and poorest households is at its highest level in 16 years – another sign that cost of living crisis Worst for those least equipped to cope.
Boris Johnson and Chancellor Rishi Sunak now face Everyday requests from business figures and their own MPs In an effort to take urgent action to help ease soaring costs, the inflation rate for the poorest 10 households was 1.5 percentage points higher than that for the richest 10 households. This is the largest gap since 2006.
The findings, published by the Resolution Foundation think tank, come shortly after official inflation data showed inflation. Soared to 9% in April, the highest level in 40 years. Food prices and household energy bills have contributed to the crisis, which ministers believe could intensify in the coming months.
The Treasury is preparing to act, but is eager to focus its efforts on the poorest households amid ongoing concerns about costs and the risk of driving up inflation.However, it faced opposition within the 10th Windfall tax on energy companies to help reduce bills.
Yesterday, former Conservative leader Ian Duncan Smith called for an immediate increase in benefits based on inflation to provide a “shield” for the poorest. He said using rebates and earmarked funds to tackle the problem was “a step in the wrong direction in tackling poverty”.
Last week, former Conservative Prime Minister Norman Lamont joined other senior officials in calling for broader action when he called for an increase in universal credit and an expansion of existing Cozy Home Offer – An idea that Sunak is exploring. The scheme currently offers £150 off bills to 3 million households in England and Wales.
New analysis by the Resolution Foundation shows inflation in the poorest decile of households has hit double digits at 10.2%. It is now significantly higher than the 8.7 percent rate experienced by the top 10 households — a historically high level in itself. That gap has widened as poor households spend a greater portion of their income on energy. The 1.5 percent gap is the highest on record and higher than the last period of a surge in food prices in the early 2010s.
The news comes as Labour analysis suggests the average household will earn nearly £500 less this year than previously forecast Sunak’s Spring Statement, when he was criticized for not acting forcefully enough on rising household costs. The reason for the deterioration in the data is that expected inflation has risen this year since the statement.
Labour has called for an emergency budget. “These figures illustrate the disastrous impact of price increases on households right now,” said Pat McFadden, shadow chief secretary to the Treasury. “While governments are paralyzed by inaction, the average working family is bearing the brunt of the worst hit in a generation. Serious inflation.”
According to forecasts by the Bank of England, average household disposable income in the UK is set to fall by the second-largest since the mid-1960s. “Everyone is feeling the effects of the cost of living crisis, driven by the highest inflation in 40 years,” said Jack Leslie, senior economist at the Resolution Foundation. “Low-income households are struggling with the recent spike in inflation driven by rapidly rising food prices and soaring energy bills. In fact, the gap in the cost of living between rich and poor households is at its highest level since comparable records began.
“As the government prepares for a new round of cost-of-living support, it is clear where it is most needed. The chancellor should prioritise substantial targeted support for low- and middle-income households. Doing so quickly over the next few months will logistically It’s challenging, but it can be done – whether it’s through the benefits system or through a significantly overhauled home warming discount program.”
Health Minister Maria Caulfield said on Saturday the prime minister was not “excluding anything” amid calls for a stronger welfare system. She hinted at plans to take further action.
“He is very aware of the difficulties the family is facing and will do whatever he can,” she told the BBC. “He has shown his agility during the Covid crisis.”