It is the poor that pays the price

 

The Resolution Foundation forecasts that a typical household's income will fall by about £1,000 this year once the effect of inflation is accounted for.

That would be the biggest real-terms fall in incomes since the mid-1970s, 50 years ago, it added.

Many families were already expecting their monthly spend to go up when the energy price cap jumps in April, and National Insurance contributions rise.

But In a new report, the Resolution Foundation said the Ukraine conflict would push up living costs even further as the prices of fuel and other goods surged. It expects inflation, which measures how the cost of living changes over time, to peak in April at 8.3%.

 "...a deep living standards downturn is just getting going," it added, also warning that wages are not forecast to grow particularly fast either.

Its principal economist, Adam Cortlett, said soaring bills would hit low and middle-income families the hardest.

He also suggested poorer households would face a "living standards rollercoaster" because of the way that benefit payments are set months in advance.

For example, most working age benefits and the state pension are due to rise by 3.1% in April - a time when the increase in the cost of living could be as high as 8%. 

Torsten Bell, chief executive of the Resolution Foundation, said: "While the economic fallout from the war will feel trivial compared to the suffering experienced by millions of Ukrainians, it will still have a significant impact in Britain." He suggested that surging gas and oil prices would worsen the "cost of living crisis", causing a "painful squeeze on family incomes".

Helen Dickinson, the chief executive of the British Retail Consortium, said sales would soon come under pressure. 

“The future is looking increasingly uncertain, with current demand unlikely to be sustained,” she said. “The cost of living will continue to spiral due to global inflation, increasing energy bills and the rise in national insurance this spring. With households facing lower disposable income, discretionary spend will be one of the first things to feel the squeeze.”

UK household incomes facing biggest decline since mid-70s, says thinktank | Cost of living crisis | The Guardian