Millions of families have been pushed to the brink of poverty because ofбrising living costs and stagnating wages, a new report warns. The Joseph Rowntree Foundation said the number of people living below an adequate standard of living had increased by four million to 19 million over the past six years. And it said the situation was likely to worsen unless the Government took drastic action to protect the poorest. The increase in living costs has been driven by rising prices of goods and services,бresearch found. in January as food and fuel prices pushed up the cost of living. The price of a minimum \”basket of goods\” has jumped by up to 30 per cent since 2008, but average earnings have only gone up by half that amount, said the report. Campbell Robb, chief executive of the Joseph Rowntree Foundation, said: \”These stark figures show just how precarious life can be for many families. \”Government focus on people on modest incomes is welcome, but it cannot be at the expense of those at the poorest end of the income scale. It must remember just about managing today can become poverty tomorrow. \”This could be a very difficult time for just managing families as rising inflation begins to bite into finely balanced budgets. \”The high cost of living has already helped push four million more people below an adequate income, and if the cost of essentials such as food, energy and housing rise further, we need to take action to ease the strain. \”The Government can help in next month\’s Budget by allowing families to keep more of their earnings and ensuring benefits and tax credits keep up with the rising cost of living. \”
Matt Padley, of Loughborough University\’s Centre for Research in Social Policy, one of the report\’s authors, added: \”Our report has shown a steady growth in the numbers of people with too little income. \”Unfortunately, the conditions to the end of the decade still look unfavourable for these groups. \”With forecasts of rising inflation, slowing wage growth combined with cuts to tax credits, the outlook is set to be highly challenging for families whose low incomes mean they are, at best, only just managing to make ends meet. \” TUC general secretary Frances O\’Grady said: \”This will come as no surprise to working people. \”They can see in their pay cheques that wages haven\’t fully recovered since the financial crisis. \”There\’s a problem here and the Government needs to do something about it. \”The Prime Minister needs to tell us what her plan is to get wages rising faster. \” Debbie Abrahams, shadow work and pensions secretary, said: \”This report makes clear millions more people are struggling to make ends meet as a result of this Government\’s seven wasted years of austerity. \”If the Tories were serious about supporting families on low incomes, they would start by reversing cuts to in-work support that will see some working families worse off by бе2,600 a year. \” A Government spokesman said: \”A million workers have had a pay rise thanks to our national living wage, and we have delivered the fastest wage growth for the lowest paid in 20 years, taken millions of people out of tax altogether and frozen fuel duty for seven years in a row. \” PA БAny way you slice it, incomes arenБt keeping up with the inflation rate,Б said Michael T. Darda, chief economist at the trading and research firm MKM Partners.
It was the 10th consecutive month that the weekly average salary had failed to keep pace with inflation, according to statistics from the Labor Department.
Employers are doling out modest wage increases, but not nearly enough to compensate for more expensive food and fuel. БPeople see it and they feel it on a daily basis,Б Mr. Darda said. БIf itБs gasoline or food, thatБs visible inflation, and the stuff that households need the most and depend on. Б Prices have not risen at the speed they did during the oil crises of the 1970s, and financial policy makers have said they do not expect a repeat of the so-called wage-price spiral that led to double-digit inflation rates during that decade. But with home values falling and the stock market in a slump, Americans are finding it more and more difficult to pay for basic purchases. Credit card debt has spiraled upward, home foreclosures are rising, and banks have become more guarded in giving out loans and mortgages. Social Security recipients are now on track to receive the highest cost-of-living increase since 1982. can try to choke off inflation by raising its benchmark interest rate. But such a move would also make it harder for businesses, banks and households to obtain loans, which could cause a further slowdown in the economy. Investors now expect the Fed to hold rates steady until at least the end of the year. Some economists have argued that as Americans cut back their spending, demand for products and services will drop, forcing businesses to lower their prices. But inflation is causing pain for businesses, too, as many companies are forced to pay more for fuel and transportation costs for goods.
To keep making money, firms may try to pass those costs on to their customers. Recent weeks have shown a few indications of relief in fuel prices, as oil prices declined steeply. On Thursday, crude oil futures dropped about a dollar to just over $115 a barrel, down 11 percent from a month ago. Gasoline prices rose 4 percent in July, but that was less than half the 10 percent increase in May. Transportation costs also decelerated. And the dollar has waged a comeback against foreign currencies; on Thursday, it reached a six-month high against the euro. But while some economists predicted that inflation would start to ease, they said that process could take several months. Many reserved the right to modify their forecasts if the price of oil rebounded. Over all, the Consumer Price Index, considered the benchmark gauge of domestic inflation, rose 0. 8 percent in July. Economists had predicted an increase of half that rate. In June, prices rose 1. 1 percent, the second highest monthly pace in 26 years. The C. P. I. surveys the prices of a basket of common goods and services, from toothpaste and prescription drugs to airline fares and restaurant menus. Because food and energy prices can be highly volatile from month to month, the Labor Department also calculates a so-called core price index, which strips out those costs. In July, core C. P. I. rose 0. 3 percent, reaching a 2. 5 percent annual rate. That is higher than the Fed and other economic policy makers would prefer. Central bankers use core C. P. I. to see whether price increases are becoming entrenched in the broader economy; Fed officials are said to prefer to keep the annual inflation rate at or below 2 percent.