Pressure mounts on Government after new figures show spiralling cost of living

Charities and think tanks warned that the poorest households are being hit worst and will need further support

August Graham
Wednesday 18 May 2022 12:37
Chancellor Rishi Sunak said he cannot ‘protect people completely’ from the rising cost of living (Oli Scarff/PA)
Chancellor Rishi Sunak said he cannot ‘protect people completely’ from the rising cost of living (Oli Scarff/PA)

Calls are mounting for Chancellor Rishi Sunak to take urgent action on the cost-of-living crisis as official figures showed inflation soaring to a 40-year high.

Charities, think tanks and opposition politicians said the Government needs to do more for the poorest households, who are being hit the worst under the crisis.

Households are struggling under the weight of prices that are increasing faster than at any point in more than a generation, data showed on Wednesday.

The Office for National Statistics (ONS) said Consumer Prices Index inflation rose to 9% in the year to April, up from an already high 7% in March.

It was the fastest measured rate since records began in 1989, and the ONS estimates it was the highest since 1982.

A large portion of the rise was due to the price cap on energy bills, which was hiked by 54% for the average household at the start of April.

Grant Fitzner, chief economist at the ONS, said: “Inflation rose steeply in April, driven by the sharp climb in electricity and gas prices as the higher price cap came into effect.

“Around three-quarters of the increase in the annual rate this month came from utility bills.”

The Government is already handing out £150 council tax rebates for many homes and will take £200 off energy bills from October. But campaigners say this will not be enough for many people.

(PA Graphics)

Imran Hussain, director of policy and campaigns at Action for Children, said: “These grim figures make clear that more and more families are starting to run out of road as they face inflation at its highest level in a generation, spiralling energy bills set to rise further, and an entirely inadequate benefits system.

“Government action is needed now to support incomes and cushion vulnerable families through this crisis. This means increasing benefits in line with the actual cost of living, and targeting help to children in low-income families through a rise in the child element of Universal Credit.”

Mr Sunak said inflation is hitting countries around the world, and pointed to energy prices as a main culprit.

“We cannot protect people completely from these global challenges but are providing significant support where we can, and stand ready to take further action,” he said.

Already ahead of the figures being released, surveys showed people were switching to cheaper alternatives and trying to control how much energy they use.

(PA Graphics)

Much of the jump is down to the high cost of energy on international markets, especially gas, although oil prices have also shot up.

This has also pushed up the price of many other items, including food, which are made or transported using gas and oil-based products. The war in Ukraine has also hit global food supplies.

Just getting around, including to work, has become more expensive for households too. Prices for both petrol and diesel are at record highs, although recently soaring prices for second-hand cars eased off slightly in April.

Meanwhile, restaurant prices are also increasing, rising 1.8% in just a month.

Shadow chancellor Rachel Reeves said the news is “a huge worry for families already stretched”.

Chancellor of the Exchequer Rishi Sunak said he could not ‘protect people completely’ from the rising cost of living (Oli Scarff/PA)

She added: “We can’t wait any longer for action from this out-of-touch Government.

“Today, Labour force a vote for an emergency budget and for a plan for growth.”

The Joseph Rowntree Foundation said parents are skipping meals to ensure their children can eat and others are cutting back on showers to save water.

Rebecca McDonald, the foundation’s senior economist, said: “Inflation has hit a 40-year high. Yet last month, with prices already climbing, the Chancellor chose not to uprate benefits in line with inflation, leaving the basic rate of benefits at its lowest for 35 years.”

Last week, Mr Sunak said he was not able to raise benefits more than 3.1% due to an old computer system that the Department for Work and Pensions uses.

The Institute for Fiscal Studies economic think tank suggested the poorest households might be facing inflation of 10.9%.

This is higher than average because they spend a larger portion of their money on heating and lighting their homes.

The British Chambers of Commerce warned “unprecedented” inflation could spark a recession later in the year.

Its head of economics Suren Thiru said: “The marked acceleration in the headline rate in April reflected the continued upward pressure on prices from surging energy and commodity costs, as well as the energy price cap rise and the reversal of the VAT reduction for hospitality in the month.

“The scale at which inflation is damaging key drivers of UK output, including consumer spending and business investment, is unprecedented and means there is a real chance the UK will be in recession by the third quarter of the year.”

The level of CPI including owner occupiers’ housing costs (also known as CPIH) rose 7.8% in the year to April, up from 6.2% in March.

The Retail Prices Index rose from 9% in March to 11.1% in April.

Experts also said pressure will now mount on decision makers at the Bank of England to increase interest rates and help protect savings.

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