Poorest Britons face 10% inflation on Ukraine war effect: think tank

[LONDON] Britain's poorest households will by hit by an inflation rate over 10 per cent as the war between Russia and Ukraine pushes up energy and food prices, and finance minister Rishi Sunak should ease the hit in a budget update next week, a think tank said.

The Resolution Foundation said on Monday consumer price inflation was likely to surpass 8 per cent and would go over 10 per cent in the autumn for the poorest families, who spend twice the share of family budgets on food and energy bills than the richest tenth.

James Smith, research director at the Resolution Foundation, said, there was a risk of a recession but Sunak had room for about £30 billion (S$53.3 billion) worth of extra borrowing as tax revenues were likely to come in higher than previously expected.

"The top priority should be to protect poorer households, who are most exposed to the biggest cost of living crisis Britain has faced in generations," Smith said.

He called for an 8 per cent increase in welfare benefits, rather than 3.1 per cent planned for April.

"The chancellor cannot protect Britain entirely from the difficult times that lie ahead, but he needs to act urgently to ensure the pain is fairly shared," Smith said.

Britain's finance ministry said on Sunday it would continue to monitor the economic impact of the conflict and keep its approach under review.

Sunak is due to announce an update to his budget plans on March 23. REUTERS