Cost of Living Crisis: Four Charts Explaining What’s Going On With Inflation | UK News

UK inflation hit a forty-year high in April as a result of rising housing and energy costs.

Prices rose 9% over the past year, according to new data from the Office for National Statistics.

If you haven’t had a pay rise Recently, this means that your wages they are worth almost a tenth less than a year ago.

So what is driving prices up?

The biggest contributors to inflation are housing and transportation costs, which have been rising for the past year and a half.

In April, these figures were reinforced by an increase in the ceiling price of energy and the annual increase in income from social housing.

Together they account for more than half of overall inflation.

inflation charts

Are companies scamming us?

High inflation could suggest that companies are ramping up products to make more profit.

But this is not the case, as businesses actually face faster price increases than consumers.

Costs for businesses rose 18.6% in the year to April, while the prices they sold at rose 14%. These high input prices could boost inflation later this year.

producer prices

Is there more pain to come?

Prices are expected to rise further. The Bank of England expects inflation will hit 10% At the end of this year.

One of the main reasons for this is further increases in the energy price cap, which was raised by almost £700 last month.

In October, it is expected to rise 42% to £2,801.

inflation charts

The poorest households will be the most affected, as they spend a higher proportion of their income on energy bills.

The bottom 10% of households currently face an inflation rate of 10.9%, three percentage points higher than the top 10%, according to the Institute for Fiscal Studies (IFS).

Heidi Karjalainen, a research economist at the IFS, says that the poorest households will continue to be worse off.

“State benefits only increased 3.1% in April. This means big cuts in real terms in the living standards of many of the poorest households.

“We are likely to be in a prolonged period during which the poorest households face even higher rates of inflation than headline figures suggest.”

Read more:
See how much your spending has increased
Five ways the cost-of-living crisis could be eased

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