Rising prices and falling real wages have created a cost of living crisis that causes misery for millions of low-income households. In this briefing, we look at the evidence and the policy options.
While the media headlines highlight that the inflation rate rose by 7.9% in the 12 months to June 2023, down from 8.7% in May, prices are still rising rapidly. Food increased by a staggering 17.4%. In contrast, the TUC has calculated that UK workers will miss out on £3,600 this year due to their wages not keeping pace with the OECD average.
We argue that the Bank of England’s interest rate policy is adding to the misery, supporting a myth that the inflation rate can be reduced by curbing wage increases. Even the IMF has pointed to rising company profit margins. As the STUC’s Roz Foyer said, “Rishi Sunak or Jeremy Hunt don’t talk about restraint for these companies. They call for restraint for the workers.”
We live in one of the wealthiest countries in the world, and yet in the UK, millions are going without the essentials we all need to get by. We argue that the UK Government needs to stop scapegoating workers for rising inflation and tackle the real causes of rising prices and falling incomes.