Inflation slows but poor suffer

Living costs rise faster for least well-off

POOR households have been hit by higher inflation than richer ones this year, research has found.

Think tank the Resolution Foundation said living costs since January have been driven up by higher housing, food and drink prices.

These hammer poorer families more than most, with food and non-alcoholic drink gobbling up an average 18% of their weekly spend. That compares with 9% for the richest fifth of households.

The Resolution Foundation says, as a result, the poorest 10% saw inflation rise more than 2% between January and June. Yet it was less than 1.8% for the wealthiest.

It marks a reverse from the second half of 2016 when the rising cost of fuel, which takes up a bigger chunk of wealthier households’ budgets, meant their inflation rate was higher.

Falling fuel prices contributed to a bigger than expected slowdown in inflation last month, the Office for National Statistics announced yesterday.

The consumer prices index – which measures prices year on year – dropped from 2.9% to 2.6%. But experts warn it could be a temporary blip. At 2.6%, inflation is still outstripping wage growth, which averaged 1.8% in the three months to May. Stephen Clarke, policy analyst at the Resolution Foundation, said: “The small fall in inflation is good news for struggling households, though with average pay growth barely hitting 2%, pay packets will continue to shrink for the rest of the year at least.”

TUC general secretary Frances O’Grady said: “The Government must stop this cost of living squeeze. Many working people are caught in a vice as rising prices crush their pay.”

Unite assistant general secretary Gail Cartmail said: “This slight fall in inflation is a cruel illusion that will be snatched at by desperate cabinet ministers trying to paint that everything is rosy with the British economy.”