Inflation down to lowest level since 2021, but high interest rates are a sting in the tail for workers

Close-up of woman with empty shopping basket by diary aisle at grocery store.

Responding to the CPI inflation figures for April 2024, released by the Office for National Statistics, Ben Harrison, Director of the Work Foundation at Lancaster University said:

“Workers across the country might be quietly relieved that their bills and shopping are rising at the lowest level since 2021. But even at 2.3%, inflation remains above the Bank of England’s target and many people will be facing lower living standards for some time to come.

The truth is the worst cost of living crisis for more than 40 years is not yet over – most workers continue to face energy, food and housing costs that are much higher than three years ago. The sting in the tail is interest rates remain at a 16-year high of 5.25%. And while there is no guarantee the Bank of England will cut interest rates soon, low paid and insecure workers are particularly exposed to record private rent increases and higher mortgage payments.

Yet despite the challenges many workers face, it appears cost of living support from businesses and Government is winding down. Recent Work Foundation research found that only 30% of UK businesses are planning above inflation wage rises in 2024. Meanwhile the Government’s Household Support Fund is due to expire at the end of September.

Inflation remaining above target should act as a reminder to Government Ministers that now is not the time to become complacent. They should commit to extending cost of living support for those most in need until April 2026 when the Office for Budget Responsibility forecasts real wages will have finally returned to 2008 levels.”

Wage rise data is from Shifting Priorities (8 May 2024) – using data from a YouGov survey of 1,000 senior business decision-makers (11 and 19 March 2024)

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