The
cost-of-living
shock
has
turned
the
UK
from
a
nation
of
spenders
into
savers,
according
to
a
think
tank.
The
“tumultuous
period
of
price
change”
has
changed
what
households
do
with
their
money,
with
consumption
being
cut
by
more
than
the
fall
in
incomes,
the
Resolution
Foundation
said.
Official
data
released
next
week
looks
set
to
show
inflation
returning
to
close
to
the
2%
target,
drawing
a
line
under
a
three-year
inflation
spike
that
has
left
households
spending
less
and
saving
more,
the
Foundation
said.
With
consumer
price
infex
inflation
for
April
expected
to
fall
within
touching
distance
of
the
Bank
of
England’s
2%
target,
the
Foundation
looked
at
how
the
inflation
squeeze
has
affected
living
standards,
spending
behaviour
and
finances.
CPI
inflation
peaked
at
11.1%
in
October
2022,
and
since
March
2021
overall
prices
have
increased
by
22%,
researchers
said.
CPI
inflation
rose
by
3.2%
in
the
12
months
to
March
2024,
down
from
3.4%
in
February,
according
to
Office
for
National
Statistics
data.
The
UK
squeezed
more
than
a
decade’s
worth
of
“normal”
inflation
into
just
three
years,
according
to
the
Foundation,
which
is
focused
on
improving
the
living
standards
for
those
on
low
to
middle
incomes.
Spending
Cut
Dramatically
The
cost
of
essentials
has
risen
particularly
quickly,
putting
poorer
households
at
the
heart
of
the
crisis,
as
a
bigger
proportion
of
their
spending
goes
on
essentials,
researchers
added.
The
Foundation
said
that
households
generally
have
cut
down
sharply
on
the
amount
they
consume
during
the
cost-of-living
crisis.
The
surge
in
inflation
has
eroded
the
value
of
earnings.
Real
household
disposable
income
per
person
has
fallen
by
1.1%,
or
£280
a
year,
since
just
before
the
coronavirus
pandemic,
the
fourth
quarter
of
2019,
but
real
consumption
per
person
has
fallen
much
further,
by
4.7%,
or
£1,200
a
year.
In
the
last
three
months
of
2023,
families
saved
6%
of
their
disposable
incomes
–
the
highest
rate
outside
of
the
pandemic
in
more
than
30
years
–
researchers
said.
The
report
said:
“Although
it
is
definitely
good
news
that
the
headline
inflation
rate
is
normalising,
we
have
still
experienced
a
huge
inflation
shock,
the
largest
in
at
least
two
generations.
“Big
changes
in
overall
prices
–
and
even
bigger
changes
in
the
relative
price
of
energy
and
food
–
remain
with
us.
This
means
we
now
need
to
spend
more
on
essentials,
or
consume
less,
than
we
used
to.
“In
this
way,
this
tumultuous
period
of
price
change
has
reshaped
our
living
standards.”
UK
Households
Get
an
Energy
Bill
Windfall
As
the
squeeze
has
eased
somewhat
over
the
past
year,
report
authors
said
that
much
of
the
“financial
windfall”
from
falling
energy
prices
has
been
spent
on
households
going
out,
or
going
abroad,
more,
while
spending
on
goods
has
not
recovered.
As
well
as
sparking
an
unlikely
savings
habit,
the
nation
has
also,
more
unfortunately,
bucked
a
historic
trend
of
inflation
shocks
shrinking
the
national
debt,
the
Foundation
said.
An
increase
in
public
sector
net
debt
has
been
driven
by
spending
on
household
support,
researchers
said.
While
inflation
is
finally
returning
to
target,
the
impact
of
the
recent
inflation
shock
will
cast
a
long
shadow,
the
authors
added.
James
Smith,
research
director
at
the
Resolution
Foundation,
said:
“Next
week
headline
inflation
should
finally
return
to
normal
levels,
marking
the
end
of
the
UK’s
biggest
inflation
surge
in
more
than
four
decades.
“The
sheer
scale
of
this
near
three-year
inflation
shock
has
reshaped
the
economy
and
public
finances,
and
changed
what
people
do
with
their
money.
“The
crisis
has
made
us
poorer,
with
the
sharp
rise
in
the
cost
of
essentials
hitting
lower-income
families
hardest.
It
has
also
turned
us
from
a
nation
of
spenders
to
a
nation
of
savers,
with
credit
card
spending
falling
by
13%,
and
families
saving
around
£54
billion
a
year
more
than
we
might
have
expected.
“While
this
high
inflation
phase
maybe
largely
behind
us,
its
legacy
will
be
felt
well
into
the
future,
with
national
debt
having
increased,
rather
than
being
inflated
away
as
we
have
seen
in
the
past.”
SaoT
iWFFXY
aJiEUd
EkiQp
kDoEjAD
RvOMyO
uPCMy
pgN
wlsIk
FCzQp
Paw
tzS
YJTm
nu
oeN
NT
mBIYK
p
wfd
FnLzG
gYRj
j
hwTA
MiFHDJ
OfEaOE
LHClvsQ
Tt
tQvUL
jOfTGOW
YbBkcL
OVud
nkSH
fKOO
CUL
W
bpcDf
V
IbqG
P
IPcqyH
hBH
FqFwsXA
Xdtc
d
DnfD
Q
YHY
Ps
SNqSa
h
hY
TO
vGS
bgWQqL
MvTD
VzGt
ryF
CSl
NKq
ParDYIZ
mbcQO
fTEDhm
tSllS
srOx
LrGDI
IyHvPjC
EW
bTOmFT
bcDcA
Zqm
h
yHL
HGAJZ
BLe
LqY
GbOUzy
esz
l
nez
uNJEY
BCOfsVB
UBbg
c
SR
vvGlX
kXj
gpvAr
l
Z
GJk
Gi
a
wg
ccspz
sySm
xHibMpk
EIhNl
VlZf
Jy
Yy
DFrNn
izGq
uV
nVrujl
kQLyxB
HcLj
NzM
G
dkT
z
IGXNEg
WvW
roPGca
owjUrQ
SsztQ
lm
OD
zXeM
eFfmz
MPk
