By Charlie Kimber
Downloading PDF. Please wait... Issue 2790

Energy price rise brought forward just as cost of living rockets

The cost of living crisis could add £180 to households’ annual grocery bills—and the poorest 10 percent will be hit hardest
Issue 2790
A group of Barts hospital strikers, around 15 in the group, one holds a placard with Pay Up to combat the cost of living crisis

Barts hospital workers in east London strike over pay—a victory for them could encourage more struggle (Picture: Guy Smallman)

Regulator Ofgem has announced it will reveal the full scale of the energy price cap rise earlier than expected. It will set out the increase at 11am tomorrow in what is expected to be the steepest ever increase in household bills.

The cap set  a limit on how much the privatised energy giants can charge.  It is expected to go up from £1,277 a year to close to £2,000, a shattering blow for working class people. 

The announcement comes as shop prices climbed at their fastest rate in nearly a decade in January, according to research and retail groups.

The figures underline the need for much bigger wage rises if workers are to protect their living standards—let alone recover the ground lost in previous years.

Market insights group Kantar puts supermarket inflation at 3.8 percent in January, a 0.3 percentage point rise from December. “This 3.8 percent rise in prices could add an extra £180 to the average household’s annual grocery bill,” said Kantar’s Fraser McKevitt. 

Figures from the British Retail Consortium reveal that shop price annual inflation almost doubled between December and January. The rise was led by a big jump in food prices.

It is 20 years since prices were rising at the rate they are now—and poorer people are hit hardest. Official figures do not capture the real inflation rate for people on low incomes. 

The poorest 10 percent of households spent more than half of their average weekly spending—54 percent—on essentials in the financial year ending in 2020. But those in the richest 10 percent spend 42 percent of their average weekly disposable income on the same essentials. 

Spending on gas and electricity is also nearly four times higher for those in the poorest 10 percent compared to those in the richest 10 percent. And it’s twice as high for workers in the middle of the income brackets compared with the rich.

This is all before fuel price rises and tax increases hit in April. Pay rises this year are generally higher than last year. According to Incomes Data Research, workers are typically receiving pay rises worth 3 percent in 2022. 

But that’s still much less than the average rise in prices of 7.5 percent a year according to the more accurate RPI measure of inflation. It’s even well below the government-favoured CPI index that says prices are going up 5.4 percent a year.

Trade unionists must pressure union leaders to launch a genuine battle for pay increases. It’s scandalous that some groups of workers are told to put in claims around 3 percent—they’re asking for a guaranteed real terms pay cut.

To guard against future price surges, workers need rises of 10 percent or more. Every battle over pay now is important because it can encourage a more general mood to fight cuts in living standards.

For example, at Barts hospitals trust in east London 600 workers are in a pay fight with outsourcer Serco. Their take home pay is already 15 percent lower than if they were employed directly by the NHS.

Their Unite union has to make sure the strikes end with a big win that can encourage other groups of workers to fight back. 

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