Sharply rising inflation since last June's Brexit vote is already starting to hurt the poorest households in Britain. Supermarket chain Asda said on Friday its gauge of disposable income showed the weakest growth since June 2014 during February, with the poorest households hit particularly hard. While overall disposable income rose 1.7 percent in the year to February, for the lowest income families it plummeted 18 percent, as this table shows.
Inflation hurts the poorest in particular because they have rising prices for essentials like food and transport take up a bigger share of their disposable income. Consumer prices are being pushed up by rising energy costs, exacerbated by the pound's slump caused by June's Brexit vote. Real household disposable income - a measure of spending power - shrank by 0.4 percent in the last three months of 2016, the steepest quarter-on-quarter drop in nearly three years, according to official data on Friday.
Worse may be to come for low-income families. The largest proportion of British food and beverage retailers on record expect to raise prices in the next three months, according to a European Commission survey published on Thursday that dates back to the 1980s. A UBS survey of 2,000 consumers, also published on Thursday, showed a "dramatic reduction" in consumer discretionary income and intention to spend. The latest Reuters poll of economists predicts consumer price inflation will near 3 percent late this year, but previous bouts of high inflation in 2008 and 2011 suggest this may be a conservative estimate.
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