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Rising food and fuel costs sting low-income households

Low-income households were hit by rising food and fuel costs as the UK faces a cost of living crisis. Photo: Christopher Furlong/Getty
Low-income households were hit by rising food and fuel costs as the UK faces a cost of living crisis. Photo: Christopher Furlong/Getty

Low-income UK households were hit by inflation in the second half of 2021, driven by rising prices in food, drinks and tobacco, and utilities and domestic fuel, new figures show.

The largest proportion of expenditure for low-income households was on housing costs, as well as water, gas, electricity and other fuels according to the latest Household Costs Indices (HCIs) data from the Office for National Statistics (ONS).

Those on low incomes also spent a higher proportion of their expenditure on food, drink, tobacco, and gas and electricity bills than high earners.

Low-income households experienced a 5.6% rise in inflation in December 2021.

High-income households also spent the largest proportion of their expenditure on housing costs but they also spent more on transport, recreation and culture, and restaurants and hotels in the latter half of last year with increases in transport costs having a greater impact on this household group.

The figures come as UK households face the tightest cost of living squeeze since the 1970s as the energy price cap went up by 54% in April.

Read more: Energy bills: Ofgem launches review of firms hiking direct debits

Some 18 million UK households on standard tariffs saw their energy bills rise by an average of £693 per year.

Around 4.5 million prepayment customers saw their bills go up to an average of £2,017 – an increase of £708 from £1,309 under the previous energy price cap.

UK retail prices surged last month as soaring energy prices exacerbated by the Ukraine war pushed price inflation to the highest level since September 2011, with grocery prices 5.9% higher in April compared to a year before.

Rising food prices are adding to the cost of living crisis, with the average UK household facing a £271 per year rise in food bills, according to data from market research firm Kantar.

Separate figures from the ONS last week revealed that 44% of adults were spending more than usual to get what they normally buy.

The most common reason was higher food prices, with 92% of people saying their grocery bill had increased. An increase in gas or electricity bills came in at 86%, and an increase in the price of fuel at 80%.

Read more: Ukraine war and energy costs push UK retail prices to highest level since 2011

Meanwhile, overall Consumer Price Index (CPI) inflation jumped to 7% in March.

Analysts had predicted it could have soared to more than 8% due to the impact of higher energy bills, more than four times the Bank of England's (BoE) 2% target. The Office for Budget Responsibility said it expected CPI inflation to peak at 8.7% in the fourth quarter of 2022.

Watch: How to prevent getting into debt