Spiking inflation ‘could add more than £180 to family food bills next year’ as Labour accuses the Government of failing to ‘get a grip’ on the cost of living crisis
Family food bills could increase by more than £180 next year because of spiking inflation, Labour analysis of official figures has suggested.
The Office for Budget Responsibility has forecast that Consumer Prices Index inflation could rise to more than four per cent in 2022.
Such a rise would add about £3.50 to the cost of an average family’s weekly food shop, equating to about £183 more over the course of the year.
Labour accused the Government of failing to ‘get a grip’ on the cost of living crisis as shadow chancellor Rachel Reeves repeated calls for ministers to slash VAT on fuel bills to help struggling families this winter.
Chancellor Rishi Sunak said he is ‘cognisant and aware’ of price inflation and insisted ‘where this Government can act we will’.
Shadow chancellor Rachel Reeves challenged Rishi Sunak today after Labour analysis suggested the average family food bill could rise by £180 next year because of spiking inflation
The Office for Budget Responsibility has forecast inflation rising above four per cent in 2022
Office for National Statistics data for 2019/20 showed an average household with two adults and two children spent about £88 a week on food and non-alcoholic drinks – about £4,586 a year.
Labour said that if CPI inflation hits the OBR’s forecast of at least four per cent, then weekly food bills would increase by approximately £3.50 – about £183 more a year.
Ms Reeves raised the issue during Treasury questions in the House of Commons today as she demanded to know why the Government is not cutting VAT on fuel bills.
The shadow chancellor said: ‘According to the Office for Budget Responsibility, the Government’s supply chain chaos, woefully inadequate post-Brexit planning and a lack of HGV drivers have contributed to higher inflation.
‘The cost of the weekly shop is already going up and up – as the Chancellor will have heard from shoppers in Bury last week.
‘So does the Chancellor have any idea of how much the average weekly supermarket shop is expected to increase in the course of the next year, for a typical family?’
Mr Sunak replied: ‘Well, we are cognisant and aware that there is price inflation and indeed last week’s Budget addressed that and explained to the British people some of the global factors that are behind the rise in prices which are not unique to this country. But as I said, where this Government can act we will.’
Ms Reeves hit back and said: ‘Let me help the Chancellor in the answer to that question. The typical family shop is likely to go up by £180 more next year.
‘And it is not just food prices that are rising. Gas and electricity bills already up by £139 and only going to go up more.
‘The Chancellor had the opportunity in the Budget to help people with their gas and electricity bills by reducing VAT to zero per cent through the winter months.
‘It is something that Labour has called for and that the Prime Minister backed when he was campaigning to leave the European Union.
‘So who should the public blame for VAT on heating bills not being cut? The Prime Minister for not keeping his word or the Chancellor for choosing to cut taxes for bankers instead?’
Mr Sunak said numerous organisations had criticised the idea of cutting VAT on fuel bills amid claims it would disproportionately benefit wealthier families.
He added: ‘Instead, we have provided half a billion pounds, targeted at those who need our help.
‘You mention £180. The household support fund will be able to provide £150 to two to three million of the most vulnerable families in our country.
‘Indeed, the national living wage next year is going up which will ensure a £1,000 increase for someone working full time on the national living wage.
Mr Sunak said he is ‘cognisant and aware’ of price inflation and insisted ‘where this Government can act we will’
‘And because of the cut to the Universal Credit taper, a single mother working full time with two kids renting will be £1,200 better off.
The OBR said in its report published alongside the Budget last month that it expects ‘CPI inflation to reach 4.4 per cent next year, with the risks around that tilted to the upside’.
It said: ‘News since we closed our forecast would be consistent with inflation peaking at close to five per cent next year. And it could hit the highest rate seen in the UK for three decades.’
However, the OBR said it expects the spike in inflation to be temporary, returning to more normal levels in 2024.
It said: ‘The near-term spike in inflation next year is expected to be relatively short lived, with inflation returning to the two per cent target in 2024, as energy prices stabilise, supply bottlenecks ease, and a modest tightening in monetary policy counteracts the extra stimulus from the fiscal package.’