Cost-of-living gap between the UK's rich and poor at highest on record, says study

Lower-income households spend a greater share of their family budgets on energy bills, which are rising sharply, the Resolution Foundation says

Oxford Street in London. Retail sales in the UK rose 1. 4 per cent in April, while inflation soared to 9 per cent, the highest rate in 40 years. EPA
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The cost-of-living gap between the richest and poorest households in the UK has reached the highest since records began in 2006, research suggests.

The Resolution Foundation said the gap in the inflation experienced by the richest and poorest 10th of households grew to 1.5 per cent in April.

The think-tank said the difference illustrates why low-income families are at the sharp end of the UK’s cost-of-living crisis.

Its analysis showed that headline inflation for the poorest 10th of households has now hit 10.2 per cent, compared with the 8.7 per cent rate experienced by the richest 10th of households.

This was said to be because lower income households spend a greater share of their family budgets on energy bills, which are rising sharply.

The foundation said it believed the best targeted support for millions of low-and-middle-income households would come through the benefits system.

“Everyone is feeling the effects of the cost-of-living crisis, which is fuelled by the highest inflation in 40 years," said Jack Leslie, senior economist at the Resolution Foundation.

“With rapidly rising food prices and soaring energy bills driving the recent inflation surge, low-income families are at the sharp end of this squeeze. The cost of living gap between rich and poor households is at its highest level since comparable records began," he said.

“As the government prepares a fresh round of cost-of-living support, it is clear where it’s needed most. The Chancellor should prioritise significant targeted support at low-and-middle-income households.

“Doing so swiftly in the months ahead will be logistically challenging, but it can be done, whether through the benefits system or a heavily-reformed Warm Homes Discount scheme,” he said.

Updated: June 24, 2022, 12:04 PM