Global demand for oil and gas has driven up prices. Image: Pixabay
Low-income families are facing “impossible choices” as rising inflation threatens to make everyday goods unaffordable, experts have warned.
New data released on Wednesday shows the inflation rate has reached a new 30-year high of 5.5 per cent in the 12 months to January 2022. This is up from 5.4 per cent in December.
The rise will leave millions of low-income families worrying that “this further drives up their living costs and drags down their living standards”, the Joseph Rowntree Foundation (JRF) warned.
Inflation is a measure of how fast the prices of goods and services are rising from month-to-month, and the rate has been increasing dramatically.
The rise has been driven by several different factors, including a high demand for oil and gas around the globe, staff shortages and supply chain disruptions, with Brexit a contributing factor.
Rebecca McDonald, senior economist at the JRF, says some of the key drivers of the 5.5 per cent increase are transport and energy prices, with the latter set to increase in April as the energy price cap ends.
An increase in national insurance payments and council tax rates in April will squeeze finances even further.
What’s more, wages across the country are failing to keep pace with the increase in costs, meaning many families and individuals are already struggling with household finances.
Union Unison’s general secretary Christina McAnea said the figures were “the stuff of nightmares”.
“Households already feeling the pinch will be aghast at this latest hike in living costs. For many low and middle earners, food, energy and transport are quickly becoming unaffordable luxuries,” she said.
“Record numbers of workers are leaving the labour market and employers are struggling to fill vacancies. Those that can are having to up their game and pay premium wages.”
The Bank of England has forecast that the inflation rate will rise even further in the coming months, with a prediction it will reach 7 per cent by April.
McDonald said the support package was “poorly targeted” for low income households.
She said: “The poorly targeted method chosen by the chancellor for his recent support package fell short of delivering what low income families will need to afford the essentials.
“This risks creating a ‘debt now, more debt later’ approach for the families already struggling the most.”
Union TUC’s general secretary Frances O’Grady called for a rise in the minimum wage and increases in public sector pay to tackle the crisis.
“The chancellor must fund real pay rises across the public sector and raise the minimum wage to £10. This will boost household spending, helping businesses recover and creating conditions for wage growth across the economy,” she said.
Your local vendor is at the sharp end of the cost-of-living crisis this Winter. Prices of energy and food are rising rapidly. As is the cost of rent. All at their highest rate in 40 years. Vendors are amongst the most vulnerable people affected. Support our vendors to earn as much as they can and give them a fighting chance this Winter.