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Social Justice

Poorest households hit hardest as inflation reaches 41-year high

The inflation gap between the richest and poorest is the largest seen since March 2009 as the costs of essentials soar

The poorest in the UK are facing higher inflation rates than the rest of the population due to soaring costs of food and energy, new Office for National Statistics (ONS) figures show.

Inflation hit 11.1 per cent in the year up to October 2022, a figure not seen in 41 years. But prices are rising even faster for low-income households – by nearly 12 per cent for the families who have the least. 

The costs of essentials are soaring at higher rates, and low-income families typically spend a greater proportion on these items. 

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The most significant driver of inflation over the year up to October was the rise in gas prices by 36.9 per cent. Electricity prices also increased by 16.9 per cent. And food and drink prices are up by 16.4 per cent. 

Energy, food, and drink tends to reflect a greater proportion of low-income households’ spending, with around 15.2 per cent of total expenditure on these categories for low-income groups and 10.4 per cent for high-income groups.

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In the year up to October 2022, inflation averaged at 11.9 per cent for low-income households and at 10.5 per cent for high-income households – averaging out at 11.1 per cent. 

The inflation gap of 1.4 per cent between the richest and poorest is the largest seen since March 2009, when low-income households saw a 1.5 per cent inflation gap in the year following the financial crisis. 

Rachelle Earwaker, senior economist for the Joseph Rowntree Foundation, said: “Every day sees still more stories of people selling their possessions, or borrowing money at punishing interest rates, just to afford these essentials.” 

The inflation statistics come a day before the prime minister and chancellor are due to set out the Autumn Budget, with a plan to tackle the cost of living crisis. Campaigners have long called for the government to protect the most vulnerable in their economic policies by uprating benefits in line with inflation.

Earwaker added: “When the government sets out its plans tomorrow, benefits must at least be uprated in line with inflation as usual, as was promised when Rishi Sunak was chancellor. As well as upholding that pledge, the uprating should be brought forward rather than expecting people to struggle on until April before their income reaches anything approaching the soaring cost of food.”

Low-income families are turning to food banks in desperate need of help, and the soaring demand is having a significant impact.

New data from the Independent Food Aid Network (IFAN), released today, reveals 90 per cent of organisations reported both helping people who had not previously accessed support and more people needing regular food supplies between August and November.

A total of 75 per cent of organisations contributing to this latest survey were struggling with supply issues and reported a drop in donations, while 54 per cent were having to use financial reserves.

Sabine Goodwin, coordinator of IFAN said: “As inflation figures climb steeply, [the] message is clear. People’s incomes whether through benefit payments or wages must be increased so that we don’t see the collapse of charitable food aid providers already at breaking point as well as food bank volunteers in the impossible position of having to turn people away.”

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