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Inflation rises to highest level in 40 years as cost of living crisis rages on

This news post is 7 months old
 

ONS statistics released on Wednesday show that the rate at which prices are rising jumped from seven to nine per cent last month.

The cost of living crisis is showing no signs of abating as new figures show everyday prices are rising at their fastest rate for four decades. 

On Wednesday it was announced that UK inflation, the rate at which prices are rising, jumped to 9% in the 12 months to April - up from 7% the previous month.

According to the Office for National Statistics (ONS) around three quarters of the latest rise in inflation in April came from higher electricity and gas bills.

The prices of food, transport and machinery also rose, the ONS said, after the higher energy price cap kicked in last month. 

Factors such as the pandemic and the war in Ukraine - which has pushed up food prices - have been blamed in part for the crisis. 

The UK Government has warned that they cannot protect people completely from global factors, but Chancellor Rishi Sunak said ministers were “providing significant support where we can and stand ready to take further action”. 

However, campaigners and opposition politicians have said nowhere near enough is being done, with calls for an emergency budget dismissed by those in power in Westminster. 

Labour has called for a one-off windfall tax on energy companies, who have profited greatly in recent months, but Foreign Secretary Liz Truss told Sky News on Wednesday morning that lowering taxes would instead solve the issue. 

The Resolution Foundation estimates that inflation for the poorest households was higher still. 

Analysis of the latest datafound that inflation is – at 10.2 per cent – significantly higher for the poorest tenth of households than it is for the richest tenth of households (8.7 per cent). This is because lower income households spend a greater share of their family budgets on energy bills where prices are rising sharply.

The Foundation says that while everyone is affected by the tightest squeeze in household incomes in half a century, low-income households are facing the toughest time, and should therefore be the top priority for further support.

The charity said these groups can be easily targeted via the benefits system, and particularly by further uprating key benefits such as Universal Credit, or by a radical increase in the ambition of the Warm Homes Discount scheme to reduce energy bills for poorer households.

Jack Leslie, senior economist at the Resolution Foundation, said: “Inflation reached a 40-year high last month off the back of a sharp rise in energy bills and the highest food price inflation in a decade. These recent drivers of inflation mean that lower-income families are facing the most severe cost pressures, with their inflation rate already hitting double digits.

“Inflationary pressures are likely to continue to grow through the year as the effects of higher energy prices continue to work their way through businesses and into consumers’ pockets.

“Nobody knows how long these pressures will last, or how workers will respond via higher wage demands, which is why the Bank faces a tough judgement on the pace and scale of interest rate rises.

“But one thing is certain – the government must provide further targeted support for those lower income families at the sharp end of this crisis.”

Campaigners in Scotland urged people to seek help where they need it as the situation continues to grow more and more desperate for millions. 

CAS financial health spokesperson, Myles Fitt, said: “These latest figures show the harsh reality of the cost of living crisis, which is squeezing household budgets to breaking point across the country.

“Prices are going up as wages and incomes are stagnant or falling, so people are faced with a perfect storm that risks sweeping tens of thousands of households across Scotland into poverty, debt and destitution.

“We want to see more from policymakers to ease this crisis for people, but in the short term I’d recommend anyone struggling with the cost of living to seek advice from the Citizens Advice network. Whether that’s by visiting your local Citizens Advice Bureau or accessing our online resources like our public advice website.

“CAB advice is free, impartial and confidential. We can check to see if you are missing any social security payments or grants that you don’t know about, and we can also negotiate with your creditors to see if they will let you re-structure your payments.“

"Last year the Scottish CAB network unlocked a total of £147 million for people who came to us for help. The average value of those gains was over £4,400, which could be simply life-changing money for people. So contact us today and ask for a financial health check or go to our self-help website www.moneymap.scot.”

 

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