Tories in turmoil:

Boris Johnson resigns – but insists he’ll stay as PM for coming months

Inflation for the poorest households is ‘well into the double digits’, economist warns

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·Political Correspondent, Yahoo News UK
·3-min read
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File photo dated 13/01/03 of shoppers in a Morrison's Supermarket in Winsford, Cheshire. Shop prices grew at the fastest rate in more than a decade in May on the back of rapidly accelerating food inflation, according to new figures. Issue date: Wednesday June 1, 2022.
New figures from the Office for National Statistics (ONS) on Wednesday revealed inflation has hit a 40-year high. (PA)

A senior economist has warned the cost of living is soaring for households on the lowest incomes, with the poorest experiencing double digit inflation.

Inflation hit 9.1% on Wednesday, a 40-year high and the highest in the G7.

Read more: Energy bills to rise by £94 to pay for collapsed suppliers

Senior economist at the Resolution Foundation, Jack Lesie, said that rapidly rising food prices mean poorer households are being hit hardest.

He said: "Faster food price inflation meant that poorer households' inflation rates have accelerated faster than richer households.

"For the poorest tenth of families, inflation is well into double digits now."

UK historic inflation rate. See story ECONOMY Inflation. Infographic PA Graphics. An editable version of this graphic is available if required. Please contact graphics@pamediagroup.com.
Economists have warned that households on the lowest incomes will face a higher inflation rate than other households. (PA)

Responding to the latest inflation figures, the chancellor said he knows "people are worried about the rising cost of living".

"We are using all the tools at our disposal to bring inflation down and combat rising prices – we can build a stronger economy through independent monetary policy, responsible fiscal policy which doesn't add to inflationary pressures, and by boosting our long-term productivity and growth," said Sunak.

Read more: Inflation at new 40 year high of 9.1% - economy on ‘knife edge’

However, his remarks come as the government urges the public not to seek inflation busting pay-rises, claiming they could make inflation increases worse.

Boris Johnson has said raising public sector wages inline with inflation would be "reckless".

"It involves chasing inflation with wages, so that you end up having a knock-on impact of pushing inflation ever higher and therefore means the pay people do take home is worth less," the prime minister's spokesperson said on Wednesday.

Price rises in past 12 months. See story ECONOMY Inflation. Infographic PA Graphics. An editable version of this graphic is available if required. Please contact graphics@pamediagroup.com.
A growing number of food staples are seeing steep increases in price. (PA)

The cost of living squeeze is set to get tighter this winter following new predictions that the energy price cap will increase by around £1000 in the autumn.

Ofgem originally predicted the price-cap was set to hit £2,800 in October - however, new figures show it is set to rise to £2,980.

"Inflation is pushing family finances to the brink - but the low wage spiral many face isn’t new," said shadow chancellor Rachel Reeves.

Read more: Brexit will keep wages down and make UK poorer in decade ahead, study finds

"It’s a result of a decade of Tory mismanagement of our economy.

"Labour will build the high wage, high growth, stable inflation economy we deserve."

Pay growth v inflation. See story ECONOMY Inflation. Infographic PA Graphics. An editable version of this graphic is available if required. Please contact graphics@pamediagroup.com.
The government has claimed inflation-busting pay rises will worsen inflation. (PA)

The chief executive of the progressive think tank the New Economics Foundation (NEF) has said the new figures deal another blow to the most vulnerable households.

"Today, inflation has continued to climb to a 40 year high of 9.1%," said Mia Fahnbulleh.

"When a third of people in the UK are already struggling to afford everyday essentials, these price rises will deliver yet another painful blow."

Read more: 3 reasons the next few days are so dangerous for Boris Johnson

There are also warnings that the chancellor's £15bn cost of living support package announced last month could soon be out of date.

"New inflation data shows large increase in food prices, incl. as consequence of Russia’s war," said senior economist at IPPR, Carsten Jung.

"Fiscal support so far largely tried to compensate households for higher energy costs. This might soon have to broaden."

Watch: Chancellor insists govt are acting to combat rising inflation

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