New figures from the ONS show that inflation in prices is now at the highest point for two years amid the falling value of Sterling following the Brexit vote.
And rising inflation will not only affect prices in supermarkets and high streets, but reduce the income of Britain’s poorest families, according to the Institute for Fiscal Studies.
The impact of rising inflation “would reduce the real incomes of working age families receiving benefits,” the IFS found.
It noted that as the purpose of benefits is to provide a minimum standard of living “their level should reflect the cost of purchasing the goods and services required to provide that minimum standard.”
Sam Royston, policy director for The Children’s Society, called on ministers to scrap the benefits freeze entirely to help struggling families.
He told The Huffington Post UK: “Higher inflation would clearly sharpen the impact of the Government’s benefits freeze, with every pound effectively worth less in the shops.
“Almost two thirds of those affected live in working households who receive benefits to top-up low pay, so moving into work offers limited protection.”
He continued: “On top of this, struggling families face a range of other cuts to their support, including reductions to in-work support under Universal Credit, a new limit on Child Tax Credits which reduces support for families with three or more children, a harsher benefit cap that will threaten families with homelessness, and the abolition of the family element of Child Tax Credit and equivalent support in Universal Credit.
“If ministers are genuinely concerned about child poverty they must scrap the benefits freeze, and roll back cuts to in-work support under Universal Credit, when the Chancellor delivers his Autumn Statement next month.”
Citizens Advice warned last year that the effects of higher inflation on Britain’s poorest would affect people’s incentive to work, their health, and their family life.
“Of clients coming to Citizens Advice regarding benefits included in the freeze, nearly half are affected by a health condition or disability and over 40% have dependent children,” it said.
Inflation rose to 1.0% in September, up from 0.6% in August.
Sarah Hewin, of Standard Chartered, said: “We’ve got used to inflation being closed to zero over the past year or so and we think this is just the start of a sustained rise in inflation over the next few months.
“We think we could go as high as three percent by the middle of next year depending on what happens to commodity prices and it seems likely to us that inflation will be above two percent in the next couple of years.”