‘Significant threat!’ Inflation hitting four percent will slash £700 off household incomes
The Resolution Foundation is predicting that the UK’s inflation rate – which hit a two-year high of 2.1 percent last month – is on course to top 4 percent later this year. This would slash £700 off average household incomes – affecting living standards and creating a problem that the government cannot ignore, it warned.
It mirrors a trend of rising inflation already seen in the US, but increases on this side of the pond will be less stark, it said.
James Smith, research director at the Resolution Foundation, said: “With the US experiencing the fastest rise in inflation in nearly half a century, and the UK also experiencing sharp increases, many people are getting increasingly worried about a possible price spiral.
“While UK inflationary pressures are nothing like as stark as the US, we could still see inflation breaching four percent this summer, a figure well in excess of the OBR and Bank’s expectations.
“The temporary nature of this inflation spike means the Bank can look through it and avoid premature rate rises, but the £700 hit to living standards it will bring means households and the government cannot afford to ignore it.
READ MORE: State pension age Britons may receive boost of up to £360 per month
