Inflation ‘hits poorest families hardest’

Inflation is hitting the poorest families up to a third harder than the richest ones, due to the soaring cost of essentials such as gas and food, says the charity Barnardo's in a new report. Its conclusions are based on interviews with low-income families and new analysis of economic data.

Key points

  • Low-income families increasingly feel that the rising cost of essentials – such as food, energy, transport and childcare – is putting a strain on the family budget.
  • Economic data show that the goods and services bought by families on the lowest incomes saw an inflation rate in 2012 around 0.4–0.5 percentage points higher than the average.
  • The recent Welfare Benefits Up-rating Act exposes low-income families to a substantial inflation risk. Increasing benefits by only 1 per cent a year over three years means that living standards for the poorest households could be substantially reduced.
  • The government should shield the poorest families from the worst effects of rising prices. In particular it should review the uprating legislation if inflation goes above 2.5 per cent.
  • The government should take specific steps to help families with the increasing costs of childcare and energy. It should extend the increased subsidy for childcare within the new universal credit to allow all low-income working families to benefit (not just those working full time). And it should use revenues from its carbon tax to support energy efficiency schemes targeted at low-income households.

Source: Nicola Smith and Ivan Mathers, The Real Cost of Living, Barnardo's
LinksReport | Barnardos press release

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