Poorest UK families ‘brutally exposed’ to cost of living squeeze, as lone parents bear brunt – business live | Business

More UK firms are planning to raise their prices over the next quarter than ever before, which will add to the cost of living squeeze.

The British Chambers of Commerce warns this morning that economic indicators are “flashing red” as companies face increasing inflationary pressures, and look to pass them onto customers.

Two-thirds of firms said they expect their prices to rise in the next three months, a record high, a BCC survey of 5,700 firms found.

Utility bills, labour costs, fuel and raw materials were said to be driving price rises.

David Bharier, head of research at the BCC, said:

“This quarter’s survey results clearly point to a weakening economic outlook amid unprecedented cost pressures and falling business confidence….

“Businesses face an unprecedented convergence of cost pressures, with the main drivers coming from raw materials, fuel, utilities, taxes, and labour.

“The continuing supply chain crisis, exacerbated by conflict in Ukraine and lockdowns in China, has further compounded this.”

Price rises will fuel concerns of profiteering, but 28% of respondents have predicted their profits will decrease.

You can read the IFS’s report showing the high relative poverty rate for children of lone parents online, here.

It explains how relative poverty for children of lone parents rose from 40% in 2013-14 to 49% by 2019-20, before the pandemic struck (as shown in the opening post).

In addition, there was no progress in reducing absolute poverty for children of lone parents in the years leading up to the pandemic.

That flatlining of absolute poverty and rise in relative poverty for children of lone parents reflect reductions in the real value of state benefits in the years from 2011 to 2019, IFS says.

Jonathan Cribb, associate director at IFS and an author of the report, explains:

‘Rises in employment pushed up incomes of lone-parent families in the years running up to the pandemic, but cuts to state benefits and tax credits reduced their incomes.

The combined effect was that there was no progress in reducing absolute poverty in lone-parent families between 2010 and 2019, and their incomes fell further behind those on average incomes.’

In another blow to families, the “relentless” increases in the price of food may not hit their peak until next year, an industry group has warned.

The Food and Drink Federation, which represents UK food and drink makers, said it usually takes 7-12 months for producers’ costs to reach shop shelves.

The federation’s boss, Karen Betts, warned the BBC that prices would “absolutely” get worse before they get better — as the surge in energy and fertilizer prices following Russia’s invasion of Ukraine continued to feed through to the shops.

Food and drink price inflation rose to 8.7% in the year to May, according to the Office for National Statistics.

Betts believes prices will accelerate, predicting:

“I think the peak could well be into next year and that prices could well rise some way above 10%.”

Last week, the British Retail Consortium warned that shop price inflation had hit its highest rate in almost 14 years, particularly for fresh food:

Several single mothers have spoken to us about the challenge of looking after children in the cost of living crisis, as prices of essentials such as food and energy push higher.

Here’s Steph Owens, 29, from Kent:

I’ve been a single mother since my son was born. He’s now five. We live in a house together in Kent, and I work as an NHS associate practitioner – helping to plan and facilitate discharges from hospital.

I was working in learning disabilities, and we had such a heavy drop in case load because of the pandemic they couldn’t take me on and made me redundant. That was very difficult. I was unemployed for four months and had to use food banks because universal credit payments just didn’t catch up with my income.

There was a sense of shame in it. Almost a sense that you can’t provide the very basics you should be able to for your child. I contacted Single Parent Rights and they signposted me to the benefits I was entitled to. You see in the comments all the time on social media, people saying things like: “Well don’t have children if you can’t afford them.” But life isn’t like that. Circumstances change. You can’t predict the future like that.

I still rely on universal credit despite working full-time now, and I am really feeling the squeeze. My energy bills and food costs have gone up by about £200 a month. I’m absolutely terrified about October when they are set to go even higher. My rent has been going up every three years now, and the council tax has also risen. The cost of the gas hit me hard over winter. I use pay as you go so I don’t get a huge bill at the end of the month but we have had to wrap up warm and just switch it off most days.

You can read more from Steph, and other single mothers, here:

UK families have suffered 15 years of income stagnation which left them “brutally exposed” to the current cost-of-living crisis.

So warns the Resolution Foundation, who says there has been a “complete collapse of income growth for poor households” over the past two decades.

Resolution has calculated that real typical household disposable income growth for working age families has slumped to just 0.7% a year in the 15 years leading up to the Covid-19 pandemic.

That meagre increase in income, after inflation and tax, left households ill-prepared for the fastest surge in prices in decades. Those in rented accommodation and with young children were particularly vulnerable.

Resolution’s latest annual Living Standards Audit showed the consequences of the UK’s “toxic combination” of low growth, and persistently high income inequality.

It says that between 1961 and 2004-05, typical household incomes for non-pensioners grew by 2.3% in real terms, on average, or 25% per decade.

Between 2004-05 and 2019-20 however, typical real income growth slowed to a crawl.

Even more starkly, the typical incomes of the poorest fifth of the population were no higher on the eve of the pandemic than they were back in 2004-05, despite GDP per person growing by 12% over this period.

Adam Corlett, principal economist at the Resolution Foundation, explains:

“Households across Britain – and across many other countries – are currently grappling with high levels of inflation that we haven’t seen for generations.

“But while many of the causes of the current crisis are global in nature, it is Britain’s recent history of low income growth and high inequality that has left so many households really struggling to cope.

“Britain’s poor recent record on living standards – notably the complete collapse of income growth for poor households over the past 20 years – must be turned around in the decade ahead.

“To do that, we must address our failure to raise pay and productivity levels, strengthen our social safety net, reduce housing costs and build on what we’ve done well – such as boosting employment for lower-income households.”

Good morning, and welcome to our rolling coverage of business, the world economy, the financial markets, and the cost of living squeeze.

As the cost of living crisis escalates, single-parent families are among the most exposed to soaring inflation after a decade of austerity-driven cuts to benefits, new research shows.

The Guardian reports this morning that half of all children in lone-parent families are now living in relative poverty.

In the first of a series of reports from the frontline of the cost of living crisis, we show how women raising their children alone are in a much weaker position to cope with the shocks of the pandemic and rising prices of basics such as food and heating, following cuts to state support by successive Conservative governments.

Our economics correspondent Richard Partington explains:

Research shared exclusively with the Guardian by the Institute for Fiscal Studies sets out the scale of the crisis. It shows relative poverty for children in lone-parent families has risen at a significantly faster rate compared with other households.

Relative poverty is defined as having an income of less than 60% of the national median, adjusted for household size. For single parents, this measure of poverty rose by nine percentage points between 2013-14 and 2019-20 to reach 49% at the onset of the global health emergency.

In sharp contrast, the rate for children in two-parent families rose by only two percentage points to reach 25%.

Tony Blair, the former Labour prime minister, warned that a “painful cost of living squeeze” was hitting families and that progress in tackling child poverty was severely undermined by sweeping benefit cuts imposed over the past decade.

With households across the country facing the worst inflationary shock since the 1980s, charities warned that single mothers were suffering a heavier toll from soaring energy prices and the rising cost of a weekly shop.

Here’s the full story:

Also coming up today

UK motorists have been warned they could face major disruption today amid widespread protests at rising petrol and diesel costs and calls for a cut in fuel duty.

Organisers are expected to block the Prince of Wales Bridge crossing between England and Wales, according to police.

Essex Police said they are also aware of a planned protest and will work to “minimise disruption to the public on the county’s main roads”.

The financial markets could be subdued, with Wall Street is closed for Independence Day. European stock are set to open a little higher.

The agenda

• 7am BST: German trade balance for May
• 10am BST: Eurozone producer prices report on factory inflation for May
• 2pm BST: Bank of Israel interest rate decision