Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

UK's rich and poor face similar inflation - but different economic pain

Economic IndicatorsJan 28, 2022 15:10
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: Shoppers browse clothes in a store in central London February 15, 2011. REUTERS/Paul Hackett

By Andy Bruce

LONDON (Reuters) - Britain's rich and poor alike are experiencing surges in inflation, official data showed on Friday, although soaring food and energy prices mean low-income households stand less chance of avoiding the hit from rising prices.

Consumer prices rose in annual terms by 5.4% last month, the highest rate in almost 30 years - making inflation a hot political topic. Some campaigners say the latest figure understates the true cost increases faced by the poorest families.

New figures published by the Office for National Statistics suggest both low- and high-income households face similar inflation to the headline rate - although the analysis was unable to take account of changed spending patterns during the pandemic or differences in the quality of food bought.

The ONS said low-income households experienced annual consumer price inflation of 5.3% in December, while high-income households faced inflation of 5.5%. The data showed there has been little to separate the two groups since 2014.

GRAPHIC-UK inflation by income

However, analysts said inflation for poorer Britons could overtake that of their richer peers this year.

"While the new ONS figures confirm that the average inflation rates experienced by different income groups are currently similar, they also highlight again how low income families experience inflation in a different way," said Jack Leslie, an economist at the Resolution Foundation think tank.

He said rising food prices and the prospect of a hike in Britain's household energy price cap in April would hurt the lowest-income families most, given they spend twice as much on food and domestic bills as a proportion of their income.

"These families should be the priority for the government's cost of living crisis response," Leslie said.

Easing the impact of April's higher energy bills for poorer households would cost at least 2.5 billion pounds ($3.4 billion), the think tank has calculated.


A Reuters analysis of household spending data suggests that the inflation faced by low-income households is skewed towards essential spending on food and shelter, leaving them less able to adapt to increases in those prices.

In its latest report, the ONS said the slightly higher inflation rate for well-off households in December reflected their greater spending on transport.

The surging price of petrol and new and used cars - which comprise a far greater share of spending for high-income households - have been the biggest drivers of inflation over the last year.

Restaurant meals have been another big driver of inflation for high-income households.

While better-off households can spend less on eating out and delay replacing cars during a cost-of-living crisis, the inflation data last week showed a deteriorating picture for basic food and shelter costs.

Food prices rose by 1.4% in December alone, the biggest rise for nine years. Prices of meat, vegetables and bread and cereals each jumped by more than 2% in month-on-month terms.

Actual rents - where spending is skewed heavily towards the lowest income households - hit 2% in annual terms in December, the biggest rise since 2016.

The ONS defined a high-income household as one with after-tax income that is in the top 20% but not the top 10%, and a low-income household as one with an income in the bottom 20% but not the bottom 10%, when adjusted for household size.

In recent weeks social campaigner and writer Jack Monroe has brought media attention to the way the ONS measures food prices.

She has argued that in attempting to capture a representative price for a given item - say a tin of baked beans - the ONS misses out big price moves in the cheapest tins which tend to be bought by the poorest households.

The ONS itself has acknowledged the limitations of its attempts to measure consumer prices, which is based on a basket of 700 types of goods and services from a wide range of suppliers, giving 180,000 pieces of price data each month.

It plans to use prices sent straight from supermarket checkouts - increasing the number of price data points to hundreds of millions - so it has inflation data on a wider range of goods within a particular category.

Friday's figures also reflect spending patterns for 2019, before the pandemic - something the ONS plans to rectify in new data in May.

($1 = 0.7457 pounds)

UK's rich and poor face similar inflation - but different economic pain

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Smart Trade
Smart Trade Jan 28, 2022 10:45
Saved. See Saved Items.
This comment has already been saved in your Saved Items
totally depends what basket you take. they miss the fundamental issue here that the basket if good are totally different. private schooling, private health, holidays, property. of course we all see the same increase on milk and transport !
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
Sign up with Email