Cost-of-living gap between UK’s rich, poor hits record

Bloomberg

The gap in inflation experienced by the richest and poorest households in the UK has expanded to its widest level in at least 16 years, according to a report by the Resolution Foundation think-tank.
Soaring energy bills as well as higher food costs have sent the UK’s overall inflation rate to a 40-year high of 9%. But headline inflation for the poorest tenth of households is even higher at 10.2% because they spend more of their income on energy bills, according to an analysis by the group.
The inflation gap between the poor and the rich — who face a lower rate of 8.7% – is the widest since records began in 2006, the foundation said.
“As the government prepares a fresh round of cost-of-living support, it is clear where it’s needed most,” said Jack Leslie, senior economist at the foundation. “The Chancellor should prioritise significant targeted support at low-and-middle-income households.”
The foundation is calling for targeted support to be directed at poorer households through the existing benefits system by increasing universal credit and the state pension, or by boosting employment allowances, winter fuel payments or the warm homes discount.

Sunak to unveil $760 Grants for the Lowest-Paid
Chancellor of the Exchequer Rishi Sunak is expected to unveil payments worth up to £600 ($760) for more than 8 million households to help ease the cost of living, The Times reported.
The financial aid, worth more than £6 billion in total, will go to everyone on state benefits, the newspaper said, citing the people familiar with the matter.
It is expected to come on top of a £400 discount on energy bills for every household. Sunak will set out measures to help people with soaring household bills in a statement to Parliament.
Meanwhile, the poorest people in Britain will see a 14% increase in their own personal rate of inflation later this year, almost double the pace experience by the richest in the country.
That’s the conclusion of the Institute for Fiscal Studies, which will add to pressure on Chancellor of the Exchequer Rishi Sunak to extend more aid to households.
UK consumers are facing a record squeeze on living standards because of rising costs across the economy, and that will intensify later this year when energy bills are allowed to jump again.
Those increases hit the poor hardest since they spend a greater chunk of their incomes on fuel. Natural gas and electricity bills rise 54% in April and are likely to surge another 42% on average in October, the regulator Ofgem said.
The jump is “likely to further widen the gap between rates of
inflation faced by the poorest and richest households,” said Heidi Karjalainen, research economist at the IFS.
While that will drive inflation well into double digits for the poorest households, the richest will see a rate of 8%, the IFS said.
Ofgem said the typical energy bill will spike another £800 ($1,000) a year in October, worsening a cost of living crisis that is already the worse in generations. The IFS analysis is underpinned by the Bank of England’s assumption that headline inflation will exceed 10% later this year.
To address the crunch, Sunak is set to announce a multi-billion-pound financial package on extra support, Sky News reported, without citing a source.