Inflation falling means nothing for poor people as energy prices increase 471% more than benefits have

A protest over cuts inflation benefits JRF
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The latest inflation figures show the rate that prices are increasing has lowered to 6.7%. While economists, politicians, and richer people welcomed the news, in reality it means nothing for the poorest people in the UK. This is because, as new research from the Joseph Rowntree Foundation (JRF) revealed, people on benefits are still worse off than they were – with the price of energy having risen 471% more than their benefits have.

Inflation: prices are still going up

As BBC News reported, on Wednesday 20 September, the Office for National Statistics (ONS) said that:

Slowing food prices helped drive a surprise fall in inflation in August, with the cost of living now at its lowest level in a year and a half.

Inflation, which measures how prices change over time, fell to 6.7% in the year to August, down from 6.8% in July, official figures show.

It is the third month in a row that the figure has dropped.

Price rises for milk, cheese and eggs slowed the most, while fish and vegetable prices also eased.

There was also a drop in hotel and air fare costs, although fuel prices jumped.

Read on...

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When the rate of inflation falls, it does not mean prices are coming down, but that they are rising less quickly.

That is, everything is STILL more expensive – just not as expensive as it might have been.

Tory politicians like toxic home secretary Suella Braverman welcomed the news that we’re all still paying loads more to eat and heat:

Economists also expressed their glee at this “good news”:

And journalists pushed the ‘good news’ line too:

However, back in the real world, all this means nothing if you’re reliant on benefits.

Benefits claimants: hammered from all sides

The JRF has crunched the numbers on how much prices have increased since April 2021 versus how much benefits have increased. It found that:

  • Overall Consumer Price Index (CPI) inflation has increased by 19%.
  • Food and non-alcoholic drink prices have increased by 29%.
  • Energy has increased by 80%.

However, the JRF said that during this time, benefits have only increased by 14%:

A graph showing increases in inflation, food, energy, and benefits

In other words, everything is massively more expensive now – and benefit claimants’ money doesn’t cover it. To put this into context:

  • Prices in general have risen 36% more than benefits have.
  • Food prices in particular have risen 107% more than benefits have [ED: 29-14 = 15 / 14 x 100 = 107%].
  • Energy prices have risen 471% more than benefits have [ED: 80-14 = 66 / 14 x 100 = 471%].

‘The damage has already been done’

JRF’s chief economist Alfie Stirling said of the news:

At 6.7% inflation remains high, but the real damage has already been done. For 7.3 million low-income households, the costs of essential goods and services have reached a level that is literally unaffordable. For those already skipping meals and going without hot water, the rate at which prices continue to rise is now secondary.

Not that the government seems concerned. It is currently thinking about cutting benefits in real terms next April. As the Canary previously reported:

the Department for Work and Pensions (DWP) is reportedly thinking about only increasing benefits next year in line with wage increases – not inflation.

This would mean further disaster for countless families. For example, the JRF says that nine in ten low-income households on Universal Credit are already going without things like “food, hygiene products, or adequate clothing”.

Stirling said of this:

Government can and should be doing much more to protect living standards for those on the lowest incomes. This starts with following the existing rules and raising benefits at least in line with inflation.

It’s highly unlikely the government will listen. So, while the news is gleefully welcomed by those for whom inflation is a figure on a chart – for the rest of us, it’s just another grim indicator of how unequal UK society is.

Featured image via Alisdare Hickson – Flickr, resized to 1910×1000 under licence CC BY-SA 2.0

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