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18 May 2022

Inflation is hitting the poorest hardest

The poorest face an inflation rate three percentage points higher than the richest 10 per cent.

UK inflation hit a 40-year high of 9 per cent in the year to April, new Consumer Price Index figures from the Office for National Statistics reveal. But analysis by the Institute for Fiscal Studies shows that the poorest households are being hit even harder. According to its calculations, inflation for the poorest decile of households is 10.9 per cent – three percentage points higher than inflation for the wealthiest decile (7.9 per cent). 

The disparity is down to the fact that lower income households spend more of their family budget on electricity and gas, which have soared in cost. In April, the energy price cap increased by £693 for the typical family – a rise of over 50 per cent.

Also contributing to the UK’s record levels of inflation are rising prices of food, which are up by 6.7 per cent, and durable goods (up 8.5 per cent). 

The Resolution Foundation, a living standards think tank, has said that while all households will feel the effects of rising costs, the poorest households should be prioritised for support. It has called for an increase in benefits such as Universal Credit and more support for the poorest households to help them pay their energy bills. 

Last month, the government announced a 3.1 per cent rise in benefits in line with inflation from last September. But such is the surge in prices that the real value of support to the poorest households has dramatically fallen.

[See also: Five ways the government failed to shield the UK from inflation]

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