Poorer people ‘suffering most from rising prices’

Poorer people have been hit disproportionately hard by rising prices, according to a Trades Union Congress (TUC) study.

This found that while the headline rate for the Consumer Price Index measure of inflation is 3.4 per cent, for the ten per cent of people on the lowest incomes it works out at 4.1 per cent.

Compared to this, those on middle incomes are seeing 3.6 per cent inflation and the richest only have to ensure a 3.3 per cent increase.

Such a disparity is the result of costs rising faster for bills that require a higher proportion of personal income to pay for people on lower incomes – such as domestic fuel and food.

For example, the lowest ten per cent for income spend 17 per cent of income on food, compared with ten per cent for the richest.

This also means people on low incomes who have debts are likely to find it harder to pay back what they owe.

Indeed, with the TUC analysis showing pay rates rising by 1.1 per cent, the strain on incomes and people's ability to pay is set to become even greater.

TUC general secretary Brendan Barber said: "People have been getting poorer every month for the last two years as high inflation, tax rises and the dire state of the economy take their toll on family budgets.

"Over the last year the poorest households have suffered more than anyone else from rising food prices and soaring gas and electricity bills."

He went on to attack government policies such as raising VAT, lowering tax credits and cutting public spending.

The difficulty many have in avoiding energy-related debt was emphasised by the latest Legal and General Moneymood Survey, published last week.

It revealed that over the last eight months an extra million households have found it hard to pay their bills.

By James Francis