Inflation: At least 100,000 more people at risk of being pulled deeper into poverty

Families on low incomes are facing a worrying winter ahead as today’s figures show inflation has hit 5.1%. The rising cost of utilities are especially challenging given they take up such a large share of low-income families’ budgets.

The Government recently announced that benefits will be uprated by 3.1% in April which will close some of the growing gap between people’s incomes and their costs. However, this does not address the immediate hardship families are experiencing this winter.

In October, the Office for Budget Responsibility projected inflation to peak at 4.4% by April but today’s 5.1% exceeds that level.

New JRF analysis based on OBR forecasts shows that should inflation be 4.4% by next April:

• Around 100,000 individuals are at risk of falling into deep poverty (below 50% of median income after housing costs) due to benefit uprating being less than inflation in April
• Around 7 in 10 of whom live in households that contain children
• Around half live in working households

Given today’s high inflation figures, this could be an underestimate and even more individuals may be at risk of deep poverty.

The outlook is especially stark for people who are out of work and reliant on social security to make ends meet. These families have already experienced a £20-a-week cut to Universal Credit. This also comes after a decade of cuts and freezes to social security which has left the system wholly unable to provide the support millions of people need.

Katie Schmuecker, Deputy Director of Policy & Partnerships at the Joseph Rowntree Foundation, said: “It is deeply concerning that families on low incomes, who are already struggling to make their budgets stretch, are at risk of being pulled deeper into poverty. Prices are rising sharply and support available to people is inadequate.

“Everyone in our country should be able to afford the basics yet there is no sign of any respite on the horizon for families struggling to keep their heads above water.  Too many people who are being hit by rising energy bills and increasing food prices are forced to ask themselves what essentials they will go without this winter.

“In a country like ours, social security should, at a bare minimum, enable people to meet their needs with dignity. Unless the Government urgently strengthens support, we will see more and more people being pulled deeper into poverty and debt in the months ahead. This is not only harmful but also completely avoidable.”