Inflation affects poorest 1.6% more in real terms

Consumer Price Index (CPI) inflation rose to 9.1% (from nine percent), and the Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose from 7.8% to 7.9% in May, according to the Office for National Statistics (ONS).

The increase was driven largely by household essentials (rising energy bills and food costs) and soaring energy bills.

The Resolution Foundation said these drivers of inflation meant poorer households experience higher inflation in real terms than higher-earning households.

Its research found headline inflation for the poorest tenth of households is approximately 10.3%, compared with 8.7% for the riches tenth. This 1.6% difference is the largest it has been since comparable records began at the beginning of the millennium.

Inflation is set to soar further, as at the last inflation data collection average petrol prices were 165.9 pence per litre. They currently stand at 186.9 pence per litre.

Jack Leslie, senior economist at the Resolution Foundation, said: “The latest inflation is worryingly high, but will feel low for consumers as it predates the big spike in petrol prices over the past month.

“With inflation also being driven by rising energy bills and food prices, poorer households are experiencing the greatest cost-of-living pressures, with their own inflation rate already in double digits.

“This is why the Chancellor was right to prioritise vulnerable families in his latest cost-of-living support via additional means-tested flat-rate payments, and is right to uprate benefits in line with this September’s inflation next year.

“With the economic outlook so unclear, no-one one knows how high inflation could go, and how long it will continue for – making fiscal and monetary policy judgements particularly tough.”