Rising prices are bearing down most heavily on lower income families

Published on Wages & Income

 

The rising cost of food and clothing means that inflation is increasing fastest for the poorest households, the Resolution Foundation said today in response to the latest inflation figures.

The Foundation notes that the rising cost of food and clothing – which was falling this time last year ­– is now the biggest driver of the change in inflation.

With the poorest fifth of households spending almost twice as much of their income on food and clothing as the richest fifth of households (20 per cent vs 12 per cent) the Foundation’s analysis shows that lower income families are seeing the fastest inflation increases.

Stephen Clarke, Policy Analyst at the Resolution Foundation, said:

“The return of rising inflation after a two month pause will put further pressure on already stretched household budgets.

“This time last year the falling cost of food and clothing provided crucial relief for low income families in particular. But the rising cost of imports has meant that they are now a leading driver of the rise in prices.

“As a result, lower income households are now feeling the biggest living standards squeeze from rising inflation. This is particularly true of those low and middle income working families who are experiencing the combination of shrinking pay packets and the effects of their tax credits and Universal Credit being frozen in cash terms.”