UK household incomes facing biggest decline since mid-70s, says thinktank

theguardian.com:

UK household incomes are on course to collapse by the most since the mid-1970s after Russia’s invasion of Ukraine sent energy prices soaring to new highs, a thinktank has said.

The Resolution Foundation said the dramatic increase in global oil and gas prices was forecast to push UK inflation above 8% this spring, causing average incomes across Britain to fall by 4% in the coming financial year – a hit worth £1,000 per household, the biggest annual decline since 1975.

Warning the chancellor, Rishi Sunak, that urgent steps were required to help the poorest families in Britain with soaring living costs, the thinktank said weak wage growth and high inflation were expected to drive more children into poverty.

Inflation in the UK was already at 5.5% – the highest rate for 30 years – before Vladimir Putin ordered his troops into Ukraine. Now economists are warning that the conflict’s impact on global oil and gas prices will add to inflationary pressures around the world.

Although the UK sources relatively little of its gas supply from Russia – about 5% of its total imports – fears over supply restrictions amid the escalating conflict have driven up global wholesale prices.

Oil prices surged to $139 a barrel on Monday before falling back to about $125. UK gas prices rose to 800p a therm before falling to about 600p – still almost triple the price at the start of February.

The Resolution Foundation said UK inflation could therefore peak at 8.3% this spring, or even exceed the 8.4% rate of April 1991, which was the highest level for the measure of the increasing cost of living since 1982.

It said the damage for household incomes would have been bigger without the £350 boost provided by the government’s energy support package announced