Poorest families hit hardest by income squeeze

The UK's poorest families are the biggest victims of the latest squeeze on household budgets due to the rising cost of living, according to research released today.

The 10 per cent of UK households with the lowest income – £8,000 or less – have seen the biggest rise in the rate of inflation over the past year when the impact of soaring university tuition fees is stripped out, according to PricewaterhouseCoopers.

Its research shows such households faced inflation of 2.49 per cent in the year to October, compared to just 2.1 per cent for the richest 10 per cent. This is because poorer families spend twice as much of their income on fuel, and four times as much on water, the accountant says.

The findings come as families across the country are braced for a bleak autumn with rising energy bills and increasing food costs. The Consumer Prices Index inflation rate made its biggest jump for five years in October, rising to 2.7 per cent.

"When you get high global commodity prices it filter through into the poor being hit hardest," PwC's chief economist John Hawksworth said. "People talk about the 'squeezed middle' but it is the people at the bottom who really get squeezed, particularly those of working age."