IFS Press Releases

Poor experience higher inflation than rich

Date: 14 June 2011
Authors: Peter Levell and Zoƫ Oldfield

New research undertaken by researchers at the Institute for Fiscal Studies and funded by Consumer Focus reveals that:

  • Poorer households have experienced higher inflation on average than richer households over the past decade. This difference has been especially marked since 2008 (during the recession).
  • The poorest fifth of households faced an average annual inflation rate of 4.3% between 2008 and 2010, whilst the richest fifth experienced a rate of just 2.7% a year over the same period.
  • Pensioners, and in particular those dependant on state benefits, experienced higher rates of inflation than non-pensioners.
  • During the period of the recession, dramatic cuts to interest rates reduced mortgage payments, which tend to be more important for richer households. At the same time, the prices of gas, electricity and food increased and this hit poorer households harder on average.