(Bloomberg) — Britain’s wealthiest households are experiencing higher rates of inflation than poorer segments of society due to high mortgage costs and rapidly rising restaurant and hotel prices.
Most Read by Bloomberg
According to data released on Thursday by the Office for National Statistics, the richest 10 of households, perhaps those best able to cope with rising costs, saw an inflation rate of around 5% in March.
This marks a change from a year ago, when the poorest suffered higher inflation rates. The 10% of the population with the lowest incomes are now seeing a 3.9% increase in costs.
The figures show how the sharp cooling in energy and food inflation has eased pressure on the finances of Britain’s worst-off countries. The poorest spend a disproportionate amount of their income on these bills and were therefore hit hardest when inflation rose following the Russian invasion of Ukraine.
While the wealthiest are better able to absorb the blow of the cost-of-living crisis, they are now seeing higher mortgage costs and larger price increases for the discretionary items they buy the most, especially restaurants and other services. Economy-wide inflation has fallen sharply from a peak of 11.1% at the end of 2022 to 2.3% in April.
The ONS figures use their own household cost indices, which are different to the core consumer price index as they include changes in mortgage interest rates and other costs from buying property.
The Tories are counting on improved consumer finances to lift spirits, particularly in poorer parts of the country that backed the party in 2019. Many backbenchers in the north of England are expected to return to Labor in the July 4 election following a decline in living standards since the 2019 vote.
Meanwhile, the Bank of England’s battle to stamp out spiraling utility inflation is squeezing higher income households harder. Rapid increases in restaurant and hotel prices and high mortgage rates mean that the wealthiest are now suffering more from continued inflationary pressures.
The figures represent the impact of 14 consecutive interest rate hikes by the BOE on mortgage holders. Inflation was 5.5% for this group as many refinanced at much higher mortgage rates, compared to just 3.3% for those who own outright and 4.6% for private renters.
Pensioners also had a much lower inflation rate than other groups at 3.4%.
(Updates with details from the report.)
Most Read from Bloomberg Businessweek
2024 Bloomberg LP
#Britains #rich #hit #hardest #inflation #high #interest #rates
Image Source : finance.yahoo.com
