Official figures on Friday showed that prices in UK shops are rising at “similar” levels for both poorer and richer families, undermining claims that inflation was much higher for low-income households.
The Office for National Statistics rushed to publish the experimental data in response to criticism from Jack Monroe, a food blogger and poverty campaigner, who said the index “grossly underestimates” the reality of inflation for the poor.
Only in 2008 and 2011 — when food and energy inflation was very high — were there significant periods when the experience of inflation differed markedly across different households, the ONS said.
In April, however, when energy bills are set to potentially rise by nearly 50 per cent as a result of the energy price cap being lifted if the government does not intervene, the cost of inflation would become higher for poorer households, according to the Institute for Fiscal Studies think-tank.
In the ONS analysis, the statistical agency studied the purchasing habits of poorer and richer households, as well as those in the middle of the income distribution, and worked out different inflation rates for each depending on the general pattern of spending.
Poorer households allocate more of their budget to food and energy, the agency found, while wealthier households spend more on petrol and discretionary items such as restaurant meals and holidays.
As petrol costs are currently high, with prices up 26.8 per cent in the year to December and gas prices running at 28.1 per cent higher over the same period, the rate of inflation between different groups was “similar”, according to the ONS.
“High-income households’ experience of inflation is being driven by rising transport costs, on which they spend a larger proportion of their expenditure when compared with low-income households, while for low-income households housing-related costs are more of a factor,” it said.
The differences between groups is caused by variations in spending patterns, noted the ONS, which used the same price quotes that it collects every month for 700 items of expenditure.
The agency did not address the possibility that there is higher inflation in low-cost food items, which Monroe said was at the heart of the problem for the poorest families.
Retail experts, however, have said that supermarkets are not dropping large numbers of basic food ranges from their stores, although some had been changing which lines were on offer in certain stores.
In response to Monroe’s claims that prices of many basic goods had more than doubled, Steve Dresser, chief executive of consultancy Grocery Insight, said: “Food prices will be rising, there’s no way around it. But they’re not rising anywhere near the rate that is being reported.”
The ONS reported that food prices were 4.5 per cent higher in December compared with a year earlier, a lower rise than the overall 5.4 per cent inflation rate, although prices had risen rapidly in recent months.
The statistical agency said it was working on improving its inflation figures further and would publish new household costs indices, which aimed to reflect the experience of prices for households better.