Cost of living good news (if only)
Economic forecasting is tricky. Last month most experts thought inflation would fall. Their forecasts provoked gloom when it hardly changed. This month they were wrong again but in the right direction. They expected the headline (CPI) number for June to be 8.2%, down from 8.7 in May. It was 7.9%, the lowest for over a year. ‘Good’ news then, and relief in sight. If only.
Changes in inflation and interest rates affect everyone, but low- and middle-income people most. At its July national cost-of-living briefing Citizens Advice reported fewer debt clients with a negative budget. The number fell a whole 2% to 50%, likely reflecting higher minimum wages and inflation-linked benefits. It was ‘good’ news, but half still living with less income than basic outgoings is definitely not. For one thing our specialist debt advice – so successful in normal circumstances – may no longer be enough. Negative budgets are terrible because they impact so many aspects of people’s lives; and Citizens Advice reports more moving from surplus to shortfall every year since 2019.
With energy costs and net zero targets in mind we have been looking at home insulation. In Epsom & Ewell 59% of houses have Band D ratings for energy efficiency. Proper insulation would be unaffordable for many but the benefits huge, in household bills, public health and lower emissions. Citizens Advice is calling for new government and private investment in the project and effective communication of its importance.
Housing has been the month’s big bad issue. Mortgage rates reached last autumn’s ‘mini budget’ levels with no medium-term relief forecast. The stock of homes available for private rent has fallen steeply. Queues to view with 20 or 30 hopeful tenants are common. Rents have risen by nearly a quarter since 2019. Housing issues recorded by CAEE Advisers continue to rise. Our local research showed national housing benefit available to low-income families in Epsom & Ewell at the same inadequate level as in the rest of the country.
Food inflation provides our last piece of ‘good’ news. It’s down – to 17.3%. Clutching at straws, we noted Which? reporting on BBQ essentials or ‘where you can get the cheapest bangers (and burgers) for your buck’. Every little helps.