Rising inflation ‘bad news for everyone’ as food and fuel costs soar
20 July 2022, 08:14
Poorer households are already facing an effective inflation rate of well above 10%, the Resolution Foundation warned.
Rising costs are hitting households from the poorest to the wealthiest, with more misery to come, a leading economic think tank warned.
The latest inflation figures from the Office for National Statistics (ONS) said Consumer Prices Index (CPI) inflation rose to 9.4% in June, up from 9.1% in May.
Torsten Bell, chief executive of the Resolution Foundation, which focuses on living standards, said the figures contained “bad news for everyone”.
Food prices were rising faster than the headline rate – at 9.8% – which was a “disaster for poorer households”, Mr Bell said, while soaring petrol prices were hitting wealthier families – fuel costs have increased 42.3% in the last year.
Inflation rises to 9.4%. Bad news for everyone in today’s stats. Food prices now rising faster (9.8%) than CPI are a disaster for poorer households, while petrol prices weigh on richer household – fuel prices are up over 42.3% on a year earlier (fastest on record, since 1989)
— Torsten Bell (@TorstenBell) July 20, 2022
The foundation said the poorest tenth of households were effectively experiencing an inflation rate of 10.6% because of the proportion of their income spent on food and fuel.
For the richest 10% of households the effective rate was around 9%.
Jack Leslie, senior economist at the Resolution Foundation, said: “Rising petrol and food prices sent inflation ever closer to double digits last month.
“But this is already a reality for low-income families as they spend a greater share of their budgets on essentials like food and energy bills.
“While high inflation won’t last forever, it is likely to be with us for some time as energy bills soar again this winter. This will mean further falls in real pay.”
The think tank said high producer price inflation – which hit 17% in June – suggests further cost increase for consumers in the coming months.
The Joseph Rowntree Foundation (JRF), which aims to address poverty in the UK, said ministers must get a grip on the crisis.
Rebecca McDonald, chief economist at the JRF, said: “With inflation reaching 9.4% and wiping out pay increases, the cost-of-living crisis is only worsening and no time can be lost in preparing the country for profoundly difficult months to come.
“Watching events in Westminster, you could conclude that the crisis has been paused – if you are struggling to take showers and put food on the table it won’t feel like it.”
