“Inflation has remained low over recent years, but with the Bank of England expecting rises above 2% next year and for inflation to remain above that level for the next three years, the Government has an opportunity in the Autumn Statement to help just managing families cope with any rise in the cost of goods and services.
“Higher costs of goods and essentials impact on poorer families more, so ensuring support for those on low incomes keeps up is crucial. The poorest fifth of people in the UK spend £1 in every £6 of their income on food, much more than middle-income earners, so a price rise will have a bigger impact on the household budgets of less wealthy families. The four-year freeze on working-age benefits looks increasingly out-of-date and should be lifted in the Autumn Statement.”
JRF’s submission to the Autumn Statement recommends the Government return to the earlier system of uprating working-age benefits annually, ending the four-year freeze currently in place, as the price of goods and services begins to rise.
The cost of essentials rose three times faster than average wages between 2008 and 2014. As low income households spend a much bigger proportion of their budget on essentials, this meant that they experienced higher inflation than better off families.