London Daily

Focus on the big picture.
Thursday, Jul 10, 2025

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

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

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.

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.

EXPENSIVE ESSENTIALS


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)

Newsletter

Related Articles

0:00
0:00
Close
Severe Heatwave Claims 2,300 Lives Across Europe
NVIDIA Achieves Historic Milestone as First Company Valued at $4 Trillion
Declining Beer Consumption Signals Cultural Shift in Germany
Linda Yaccarino Steps Down as CEO of X After Two Years
US Imposes New Tariffs on Brazilian Exports Amid Political Tensions
Azerbaijan and Armenia are on the brink of a historic peace deal.
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Weinstein Victim’s Lawyer Says MeToo Movement Still Strong
U.S. Enacts Sweeping Tax and Spending Legislation Amid Trade Policy Shifts
Football Mourns as Diogo Jota and Brother André Silva Laid to Rest in Portugal
Labour Expected to Withdraw Support for Special Needs Funding Model
Leaked Audio Reveals Tory Aide Defending DEI Record
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
London Stock Exchange Faces Historic Low in Initial Public Offerings
A new online platform has emerged in the United Kingdom, specifically targeting Muslim men seeking virgin brides
Trump Celebrates Independence Day with B-2 Flyover and Signs Controversial Legislation
Boris Johnson Urges Conservatives to Ignore Farage
SNP Ordered to Update Single-Sex Space Guidance Within Days
Starmer Set to Reject Calls for Wealth Taxes
Stolen Century-Old Rolls-Royce Recovered After Hotel Theft
Macron Presses Starmer to Recognise Palestinian State
Labour Delayed Palestine Action Ban Over Riot Concerns
Swinney’s Tax Comments ‘Offensive to Scots’, Say Tories
High Street Retailers to Enforce Bans on Serial Shoplifters
Music Banned by Henry VIII to Be Performed After 500 Years
Steve Coogan Says Working Class Is Being ‘Ethnically Cleansed’
Home Office Admits Uncertainty Over Visa Overstayer Numbers
JD Vance Questions Mandelson Over Reform Party’s Rising Popularity
Macron to Receive Windsor Carriage Ride in Royal Gesture
Labour Accused of ‘Hammering’ Scots During First Year in Power
BBC Head of Music Stood Down Amid Bob Vylan Controversy
Corbyn Eyes Hard-Left Challenge to Starmer’s Leadership
London Tube Trains Suspended After Major Fire Erupts Nearby
Richard Kemp: I Felt Safer in Israel Under Attack Than in the UK
Cyclist Says Police Cited Human Rights Act for Riding No-Handed
China’s Central Bank Consults European Peers on Low-Rate Strategies
AI Raises Alarms Over Long-Term Job Security
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Musk Battles to Protect Tesla Amid Trump Policy Threats
Air France-KLM Acquires Majority Stake in Scandinavian Airlines
UK Educators Sound Alarm on Declining Child Literacy
Shein Fined €40 Million in France Over Misleading Discounts
Brazil’s Lula Visits Kirchner During Argentina House Arrest
Trump Scores Legislative Win as House Passes Tax Reform Bill
Keir Starmer Faces Criticism After Rocky First Year in Power
DJI Launches Heavy-Duty Coaxial Quadcopter with 80 kg Lift Capacity
U.S. Senate Approves Major Legislation Dubbed the 'Big Beautiful Bill'
Largest Healthcare Fraud Takedown in U.S. History Announced by DOJ
×