Elderly hard hit by rising cost of living

HOUSEHOLDS and businesses across the Westcountry could be among those hardest hit by rising food and energy bills as the cost of living crisis intensifies.

Business groups are concerned about the impact of spiralling prices on local firms as inflation has soared – and leaders warn large numbers of pensioners in the West will be affected by the increasing costs of food, transport and home heating.

The cost of living has increased at its fastest rate for four decades with mounting energy bills in particular putting households under pressure. The Consumer Prices Index inflation figure rose to 9% in the year to April, up from an already high 7% in March, the Office for National Statistics said.

Chancellor Rishi Sunak told the annual Confederation of British Industry (CBI) dinner last night that the next few months “will be tough”.

Much of the jump in prices is down to the high cost of energy on international markets, especially gas. This has also pushed up the price of food and many other items made or transported using gas and oil-based products. The war in Ukraine has also hit global food supplies, while the global pandemic has had knockon effects on global trade.

Tim Jones, chairman of South West Business Council, said inflation was hitting firms in the region, diminishing the spending power of consumers and, due to many of the region’s businesses being at the production end of the supply chain, could make the region one of the worst hit. He said: “The inflation figures are extremely worrying for the South West. A lot of the additional

costs, such as fuel and energy, are disproportionately affecting local businesses and manufacturers.”

Mr Jones added that the South West has a large number of elderly people, who are on a fixed income which is now being eroded by “unprecedented cost spikes”.

He said rising prices for essentials also hinder the spending power of consumers, especially in a leisure and hospitality region such as the South West. “It’s adversely affecting discretionary spending – a real problem,” he said.

Stuart Elford, chief executive of Devon and Plymouth Chamber of Commerce, said he was “very concerned for many businesses” and fears some could go to the wall as inflation creates a damaging squeeze on firms’ ability to invest and operate at full capacity.

He said: “My concern is that when inflation affects individuals in a tight labour market like this, those individuals pass on the cost to their employers by seeking higher wages, which in turn puts prices up and we see an exponential rise in inflation. Business is already reeling from Brexit and the pandemic and this will sadly be the end for many businesses. We are calling on the Chancellor to hold an emergency budget.”

British Chambers of Commerce, of which the Devon and Plymouth Chamber is a member, said there is now a real chance the UK will be in recession by the third quarter of the year. It predicted the latest inflationary surge is likely to be surpassed in October as the expected energy price cap rise that month could lift inflation above 10%.

It said a June interest rate rise is now “inevitable”, but even that will do little to address global factors, arguing more needs to be done to help consumers and businesses – and has advocated a reversal of the rise in National Insurance Contributions and cutting VAT on business energy bills to 5%.

Chancellor Rishi Sunak said inflation is hitting countries around the world, and pointed to energy prices as a main culprit. He said: “We cannot protect people completely from these global challenges but are providing significant support where we can, and stand ready to take further action.”

But the inflation figures prompted further calls from the opposition for Mr Sunak to do more.

At Prime Minister’s Questions yesterday, Labour leader Sir Keir Starmer pressed the prime minister to bring in a one-off windfall tax on oil and gas profits, arguing it would raise “billions” to help.

Boris Johnson, who has so far refused to back the idea, said he would “look at all the measures” needed to help people struggling with rising bills. He added that the government was “not in principle in favour of higher taxation”.

In Plymouth, Citizens Advice revealed that in the past two months it has supported 4,751 clients, with nearly 60% seeking advice on fuel debts, and a third looking for support from food banks, the Household Support Fund, or fuel vouchers. Emma Handley, a chief executive at the city branch, said: “Price increases will be potentially ruinous for many.”

Meanwhile, Andrew Selley, chief executive of Bidfood, one of the UK’s biggest food wholesalers, has warned schools may have to reduce portion sizes for children’s meals or use cheaper ingredients due to ratcheting costs.

NAHT school leaders’ union president Paul Gosling, headteacher of Exeter Road Community Primary School in Exmouth, said he is experiencing the impact of rising food costs at his school. “At the moment the school is absorbing the increased cost but it is not sustainable,” he said.

His comments came as the chairman of Marks & Spencer warned that food prices could soar by as much as 10% this year.