How Inflation Jumps Before Benefits

Chancellor Rishi Sunak’s spring statement included measures including a reduction in fuel duty and an increase in the national insurance threshold. However, it notably lacked any plan to match soaring prices with increased benefits.

New figures released today (23 March) by the Office for Budget Responsibility show that inflation is expected to average 7.4% in 2022 and 8% in the year ahead. The benefits, however, are due to an increase of just 3.1% in April, which means a reduction in real terms for millions of Britons.

Universal Credit, Child Tax Credits and Working Tax Credits are all set to be cut by 5.8% in real terms over the next year, while Jobseeker’s Allowance and child tax credits will decrease by 5.9%. The care allowance, meanwhile, will see a reduction in real terms of 5.7%.

The government’s planned 3.1% increase in benefits is based on inflation figures from last September, before the war in Ukraine sent oil prices to record highs and threatened to disrupt the economy. global food supply.

In his speech to the House of Commons, Sunak warned that Western sanctions against Russia would not be “free” and would result in higher living costs. For now, however, the government seems content to let Britain’s poorest shoulder that burden.

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