Cost-of-living crisis expected to deepen in 2023 / Poorer households are 'going under and going without', warns JRF

 

From 2h ago

08.01 GMT

https://www.theguardian.com/business/live/2022/dec/14/uk-inflation-eases-transport-fuel-food-energy-hunt-warns-tough-decisions-needed-business-live

 

Cost-of-living crisis expected to deepen in 2023

 

Several economists are warning that the UK’s cost of living crisis will continue into next year, even though the pace of price rises across the country slowed a little in November.

 

The Resolution Foundation point out that poorer households are suffering an even higher inflation rate than average.

 

The effective inflation rate for the poorest tenth of household is around 12.1%, Resolution has calculated, while the richest tenth of households experience 9.4%.

 

Jack Leslie, senior economist at the Resolution Foundation, explains:

 

“Inflation fell at its fastest rate in 16 months in November, driven by falling fuel price inflation and a welcome slowing in food price inflation. Britain may now be past its inflation peak, which is good news for policy makers at both the Bank and Treasury as they grapple with rising interest rates and public debt.

 

“But with price rises still massively outstripping pay rises – and Britain’s poorest families facing an inflation rate of over 12 per cent – families are still getting poorer month-on-month, and the cost-of-living crisis will continue to deepen in 2023.”

 

Joe Nellis, professor of global economy at Cranfield School of Management, warns:

 

We are going to experience a sustained fall in living standards over the next two years the like of which we haven’t seen in 100 years.

 

We are in a precarious position.”

 

Nicholas Hyett, investment analyst at Wealth Club, points out that higher interest rates will also add to the pressure on some households:

 

“While the annualised rate of inflation slowed in November, consumers are unlikely to feel any relief in the cost of living crisis. Prices overall continue to rise, with food prices in particular rising at their fastest rate in 45 years. What relief there is for consumers comes mostly in transport - but petrol prices have remained parked month-on-month rather than going into reverse.

 

This raises some difficult questions for policy makers. On the one hand headline inflation is easing, but whether that’s due to a weakening in local demand or simply global commodity prices is less clear. Areas like hospitality, which are more affected by domestic inflation, continue to see prices rise substantially, suggesting “core inflation” remains untamed. That’s a headache for central bankers - raising rates might help bring domestic inflation under control, but it will also exacerbate the cost of living crisis and potentially condemn the UK to a painful recession.

 

UK food inflation

UK food inflation Photograph: ONS

 

20m ago

09.21 GMT

Poorer households are 'going under and going without', warns JRF

The government support has not been sufficient to stem the rising tide of hardship for millions of families on the lowest incomes across the UK, warns anti-poverty charity the Joseph Rowntree Foundation (JRF).

 

A new JRF report has found that 7.2m low-income households are going without the basics, with 4.7m now behind on their bills.

 

JFR senior econonomist Rachelle Earwaker says:

 

We find that it is households on the very lowest incomes who are struggling the most, with three quarters of those in the bottom 20% of incomes going without food or other basic essentials like clothing or toiletries.

 

People on Universal Credit (UC), private renters and young adults are all seeing rising and worrying levels of hardship.

 

 

They warn that “Struggling households can’t wait until April 2023.” [when working age benefits and the state pension will rise in line with September’s inflation reading of 10.1%]….

 

…and have several recommendations for ministers, to help fight the cost of living crisis:

 

Provide additional cost of living payments, including at least £450 to those on means tested benefits, this winter.

Make changes to Universal Credit so that the basic rate of support, even after deductions such as debt repayments to Government, can never be so low that people are unable to afford essentials such as food, utility bills and basic household goods.

Help people keep up with their rent by unfreezing Local Housing Allowance and reinstating it to cover the bottom 30th percentile of rents.

Implement a strong campaign for benefit take-up so everyone receives the the support that is meant for them.

Stop unaffordable debt collection practices by Government.