How the poor have been hit hardest by inflation

New data shows that the cost of essentials such as food and energy has increased most rapidly over the last five years.

It’s hardly news that the incomes of poorer families have been squeezed until the pips squeak. Declining real wages, underemployment and cuts to social security have all combined to drive down the living standards of those at the bottom of the income distribution in recent years. But low-incomes families have had to contend with another downward pressure that until yesterday we may have intuited, but hadn’t yet seen fully evidenced.

Now we know for sure that poorer families have experienced higher levels of inflation than the better off and, indeed, the average, since the recession began. Analysis published yesterday by the Institute for Fiscal Studies ably demonstrates this by taking the price rises of various goods in recent years and then putting these together with information about which items are more or less readily consumed by different income groups.

Unsurprisingly, it shows that the cost of essentials such as food and energy have increased rapidly over the last five years (at about 30 per cent and just under 60 per cent respectively). The same is true for others key goods such as transport and education, while the costs of some items such as mortgage interest payments have drifted steadily downwards over the same period.

Since a lower income family’s consumption basket is full of the basics, these trends have hit the poorest hard. In fact, the IFS estimates that those on lower incomes have experienced average price rises that are 7.1 per cent higher than those of the top income quintile since 2007/8. As a result, poorer families’ living standards have been depressed more than accounts that use an average inflation figure might suggest. Likewise, the squeeze on those in higher income brackets is overstated by the standard methodology.

In fact, this exercise still doesn’t give us a full picture of how low-income families are being pinched hard by prices. As the IFS makes clear, its analysis does not capture the way that the same good can cost more or less for different types of consumers – the "poverty premium" effect well documented in a report last year from the Joseph Rowntree Foundation. Poorer families are doubly disadvantaged then: the items they consume in quantity have gone up in price quicker than other goods in recent years, and they often have to pay more than their better off peers for these basics too.

But what are the political implications of all this? For a start, this new analysis undermines the claim that poorer groups have had an easier ride than others during the recession because benefits – a largish part of their incomes – lost less of their real value than earnings. And looking forward, it shows the government is significantly underplaying the impact on poorer households of its 2012 decision to uprate most key benefits at a sub-inflation 1 per cent for three years.

All in all, if you are poor, the cost of living conversation just acquired a new and sharper edge.  

A boy walks through the Heygate Estate in the Walworth area on April 24, 2013 in London. Photograph: Getty Images.

Lindsay Judge is senior policy and research officer for the Child Poverty Action Group.

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It's Gary Lineker 1, the Sun 0

The football hero has found himself at the heart of a Twitter storm over the refugee children debate.

The Mole wonders what sort of topsy-turvy universe we now live in where Gary Lineker is suddenly being called a “political activist” by a Conservative MP? Our favourite big-eared football pundit has found himself in a war of words with the Sun newspaper after wading into the controversy over the age of the refugee children granted entry into Britain from Calais.

Pictures published earlier this week in the right-wing press prompted speculation over the migrants' “true age”, and a Tory MP even went as far as suggesting that these children should have their age verified by dental X-rays. All of which leaves your poor Mole with a deeply furrowed brow. But luckily the British Dental Association was on hand to condemn the idea as unethical, inaccurate and inappropriate. Phew. Thank God for dentists.

Back to old Big Ears, sorry, Saint Gary, who on Wednesday tweeted his outrage over the Murdoch-owned newspaper’s scaremongering coverage of the story. He smacked down the ex-English Defence League leader, Tommy Robinson, in a single tweet, calling him a “racist idiot”, and went on to defend his right to express his opinions freely on his feed.

The Sun hit back in traditional form, calling for Lineker to be ousted from his job as host of the BBC’s Match of the Day. The headline they chose? “Out on his ears”, of course, referring to the sporting hero’s most notable assets. In the article, the tabloid lays into Lineker, branding him a “leftie luvvie” and “jug-eared”. The article attacked him for describing those querying the age of the young migrants as “hideously racist” and suggested he had breached BBC guidelines on impartiality.

All of which has prompted calls for a boycott of the Sun and an outpouring of support for Lineker on Twitter. His fellow football hero Stan Collymore waded in, tweeting that he was on “Team Lineker”. Leading the charge against the Murdoch-owned title was the close ally of Labour leader Jeremy Corbyn and former Channel 4 News economics editor, Paul Mason, who tweeted:

Lineker, who is not accustomed to finding himself at the centre of such highly politicised arguments on social media, responded with typical good humour, saying he had received a bit of a “spanking”.

All of which leaves the Mole with renewed respect for Lineker and an uncharacteristic desire to watch this weekend’s Match of the Day to see if any trace of his new activist persona might surface.


I'm a mole, innit.