Inflation rise could cost households £700 a year
INFLATION is on course to increase above four per cent in the coming months, reducing average household incomes by £700, research suggests.
Think tank The Resolution Foundation said UK inflation has mirrored trends in the United States, where the rate is increasing.
It added that near-term inflationary pressures in the UK are less stark than the US.
The foundation’s analysis showed that while the UK is unlikely to experience the same inflation peaks seen in the US, if commodity prices remain at their current levels, CPI inflation could rise above 4% this year.
James Smith, research director at The Resolution Foundation, said the Government “can’t afford to ignore” this issue.
“The Chancellor can start by cancelling the planned cut to Universal Credit this autumn, which will only add to families’ financial pressures,” he said.
“A squeeze on household incomes later this year, even if temporary, is a significant threat to the strength of our current recovery.”