Inflation stats - a Brexit surge would hit poorest households twice as hard as the richest

Catherine Colebrook, IPPR Chief Economist, responding to this morning's inflation statistics and the IFS report on living standards, said:

"Today’s CPI inflation release, although above expectations at 0.5 per cent, remains well below its historical average.

"As the IFS notes in its new report, low inflation since early-2015 has helped to shield low earners’ living standards from the effects of government freezes on working age benefits and tax credits, and minimal growth in hourly earnings. That looks set to change in the coming months, however, as Brexit-induced falls in the value of the pound feed through to domestic prices.

"Inflation makes the poorest worse off, in the absence of any corresponding increase in wages or benefits. Our modelling, based on Treasury estimates of the likely effect on inflation of the Brexit vote, shows that an inflation surge would hit the disposable incomes of the poorest 10 per cent of households twice as hard as the richest."

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Kieren Walters, k.walters@ippr.org, 07921 403651
Sarah Horner, s.horner@ippr.org, 07584 604607