New research has revealed that the cost of living crisis has had a disproportionate impact on individuals with lower incomes. According to the Institute for Fiscal Studies (IFS), the cost of food for those on the lowest incomes rose at a higher rate than for those with higher incomes.
The IFS found that while overall food inflation was 15.8%, it was significantly higher (at 36.2%) for the cheapest 10% of food ranges, such as inexpensive pasta and butter. This resulted in a higher cost of living crisis for individuals with lower incomes, as they were forced to spend a larger portion of their incomes on food.
The IFS described the gap in food inflation between low and high earners as “unprecedented.” This was largely due to high energy costs following Russia’s invasion of Ukraine, which exacerbated already elevated costs caused by supply chain issues during the COVID-19 pandemic.
Official figures from the Office for National Statistics (ONS) showed that food inflation peaked at 17.8% in April 2023. However, the IFS’s research reveals that many food items actually experienced a much higher increase in price during the period of the cost of living crisis, which ran from September 2021 to September 2023.
The IFS’s findings are not reflected in the ONS data, as the official statistics body does not currently take into account the quantity of items sold when calculating grocery prices. However, the ONS has announced that starting in March of next year, they will begin using supermarket scanner data which will provide a more comprehensive understanding of inflation.
A spokesperson for the ONS stated: “Our previous analysis indicated that the prices of the cheapest items changed in line with average prices. However, from March next year we will be calculating our grocery prices using supermarket scanner data, which will show us both the price and quantity of every item sold, ensuring all items are taken into account, marking a step change in our understanding of inflation.”
