Britain only at midpoint of 2-year income squeeze: Report

By Aysu Bicer

LONDON (AA) - A leading British think tank on Monday said UK households are only halfway through a two-year cost of living crisis, with average incomes expected to go down by more than £2,000 (about $2,400).

"Typical disposable incomes for working-age family households are on track to fall by 3% in this financial year, and by 4% in the year to April 2024," said the report by the Resolution Foundation.

The research, which uses data from a new YouGov survey of 10,470 adults, indicated that only the very richest households have seen their incomes rise, while 76% of adults have tried cutting back on their overall spending.

Rising interest rates this year and next will drive a surge in savings and investment income, much of which will be captured by the richest 5% of households, meaning that they alone will see their typical incomes rise 4% through 2024, said the report.

"The crisis is already taking its toll on families, with over six million adults reporting they are going hungry as a result," Lalitha Try, researcher at the foundation, said in a statement.

"Low-income families have been hit hardest by soaring energy bills and food prices, and are most likely to have seen both their financial circumstances and their health deteriorate. The Government has rightly prioritised them in its crisis response – with support targeted at vulnerable households and tax rises hitting better-off families."

UK food prices rose at a record pace in December, hitting an inflation rate of 13.3%, up from 12.4% in November, according to the latest figures from the British Retail Consortium.

Apart from fallout from the Russia-Ukraine war, leaving the EU added nearly £6 billion to household food bills in the UK, with the poorest bearing the brunt, London School of Economics researchers recently said.

The price of food products rose 3% annually year since Brexit, leading to a 6% jump over a two-year period.