Inflation is at a 30-year high, while workers are suffering their third drop in real wages in a decade – and worse is yet to come
The economic news this week is stark. Inflation has hit a 30-year high and the average British worker is entering their third drop in real wages in a decade. But what’s really sobering is that the worst is still to come. Next month, the regulator Ofgem announces the maximum price for heating bills, and energy company bosses are already warning that they will almost certainly be double last winter’s levels. The new price cap kicks in from April, at just the point that national insurance goes up alongside council tax increases in many boroughs, and there’s a stealth rise in income tax. If government ministers think they’re unpopular now, they should check back once voters are paying what economists estimate as an extra £1,200 a year for the average household.
Without immediate state action, the human fallout of all of this will be severe. Two big points need to be borne in mind: first, when basics are shooting up in price, households cannot put off their purchases or buy something cheaper. You either switch the heating on or not; you either have enough food or you go hungry. Second, although prices are going up for everyone, not all families have the same financial buffer against this storm. As it is, debt charities are already warning of many more people trying to borrow to keep on top of their bills. Fuel poverty looks almost certain to shoot up.
