Latest interest rates show cost of living crisis is far from over

Elderly person looking at energy bill.

Responding to the Bank of England's interest rate announcement, Ben Harrison, Director of the Work Foundation at Lancaster University said:

“With interest rates remaining at a 16-year high of 5.25%, it's clear that the pain of the cost of living crisis is far from over.

Millions of workers are facing the knock-on impact of high interest rates on their mortgages as they continue to come to terms with higher costs that have outpaced pay increases in recent years. In addition, 1.4 million private renters are facing the double jeopardy of unstable work and rising rents, and are particularly vulnerable as housing costs absorb an ever increasing proportion of their take home pay.

“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.

“This risks leaving low paid and insecure workers exposed to higher prices. In an unpredictable economy and with interest rates likely to stay high in 2024, it is imperative that the Government commits now to extending the Household Support Fund up to April 2026, when the OBR forecasts real wages will have finally returned to 2008 levels.”

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