Inflation hits Bank of England 2% target but workers facing much higher prices than five years ago

A shopping trolley and groceries in a supermarket.

Responding to the CPI inflation figures for May 2024, released by the Office for National Statistics, Rebecca Florisson, Principal Analyst at the Work Foundation for Lancaster University said:

“For the first time in nearly three years, inflation has hit the Bank of England’s 2% inflation target. But this shouldn’t fool the next Government, workers are still facing much higher prices for their daily essentials than they were a few years ago.

“As the rate of inflation falls, the good news is the wage recovery is continuing. Workers now have more money in their pockets than they did last year with real nominal wage growth of 2.3% on the year.

But the bad news is that most people are feeling poorer than when they voted in the last General Election nearly five years ago. This is the first Parliament since 1955 where living standards have declined - attributable to wage stagnation alongside wider impacts of the Covid-19 pandemic, war in Ukraine and political choices.

And for many workers the cost of living crisis is not over yet. Interest rates remain at their highest level for 16 years at 5.25%, which is creating a cost of housing squeeze for many private renters and mortgage holders – with low paid and insecure workers hit hardest.

“While politicians will be hoping that interest rates ease in the coming months, the next Government has a vital role to play. The Household Support Fund – which has been a vital lifeline for those struggling to make ends meet – is due to expire at the end of September. The next Government must commit to continuing cost of living support for the most vulnerable households until April 2026 when the Office for Budget Responsibility forecasts real wages will have finally returned to 2008 levels.”

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