There has been a lot of talk this week about economic recovery but, for the poor, there are scant signs of things getting better.
Figures from the Office for National Statistics show the UK economy grew by 1.9% last year. But, as Shadow Chancellor Ed Balls pointed out, many on the lowest incomes are not feeling the benefit. This is because inflation does not work equally; it targets the poor.
A report from the Institute of Fiscal Studies, published today, confirms the extent of inequality. The report shows real median household income in 2013/14 was more than 6% lower than before the economic crisis of 2007/8. The report also suggests better-off households have seen bigger proportionate real falls in income than poorer households.
However, this figure only stacks up if it is assumed that all households face the average inflation rate which, of course, they do not. Energy prices have risen by 60% between 2008 and last year; food prices by 30% and these, combined with the rising cost of fuel, the stalling of incomes and the tightening of welfare, impact disproportionately on the poorest because they spend much more of their incomes on these essentials of life.
After crunching the figures, the Institute of Fiscal Studies has exposed the precise scale of the imbalance. It estimates that, since 2008, average annual inflation has been 1% a year higher for the fifth of households at the lowest end of the income scale than for the fifth at the highest. It is a familiar story: the poorest are paying the biggest price.
In the controlled language of the economists, Abi Adams, the co-author of the IFS report, puts it this way: the figures show that different types of households have had different experiences of inflation in recent years and inflation has largely undone what would otherwise appear to be a significant reduction in inequality.
The reality of these figures is this: the poorest in society are suffering disproportionately, and unfairly, from the rise in the cost of living and this is creating misery and worry for millions of people daily. Labour call it the cost of living crisis (the phrase has stuck because it is true) but the problem is that there is still a lack of action from the political parties.
On energy prices, for example, David Cameron has talked the talk and held his famous finger-wagging meeting with the energy companies at Number 10 but, in reality, the Coalition Government has done little more than tinker with the green levies. Ed Miliband has done much better by suggesting an energy price freeze.
In the longer term, the recovery will fix some of this imbalance when wages finally start to rise but, until the Government tackles the runaway inflation affecting energy prices and demonstrates its commitment to regularly reviewing and enforcing the minimum wage, inflation will continue to punish the poor more than the well-off.
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