Fast-rising prices are inflicting what the Bank of England says will be the biggest one-year fall inAfter a decade of stagnant living standards – and in stark contrast to promises of a high-wage economy by Prime Minister Boris Johnson – Frape, like others, is bracing for a further hit to her finances in April.
Accurate national comparisons of changes in living standards are hard to make but concerns about inflation are emerging as a big factor in elections including France’s presidential race in April and US midterm elections in November. Inflation in the United States has already surpassed 7% to reach its highest since the early 1980s, and in the eurozone it hit a record 5.1% in January.
Lower-income households are feeling the inflation pinch harder than higher earners, many of whom made big savings during the pandemic on commuting, holidays, and going out. It will spread some of the fuel price increase over the coming years and cut a tax for people in lower-value properties to provide support through 2022.
But Rebecca McDonald, senior economist at the Joseph Rowntree Foundation, which campaigns on poverty issues, said 2022 was likely to leave a lasting mark on poorer households even if inflation falls sharply.