A government minister today claimed officials will be put on a “war footing” to deal with the crisis caused by rising prices.
Inflation rose to 10.1% in July – its highest level since 1982 – and up from 9.4% in June, according to figures published today.
Mayor of London Sadiq Khan described inflation as “out of control”, as an analysis showed how the rises were hitting the poorest households the hardest.
Cabinet minister Kit Malthouse said plans were afoot to ensure the new prime minister could make “quick decisions” to help people with the cost of living crisis.
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He told BBC Breakfast: “The new prime minister will have to move quickly to take whatever steps they think it appropriate for what will be a challenging winter and possibly beyond.”
Current Conservative leadership front-runner Liz Truss favours a tax cutting approach to tackle the crisis. Supporter Sajid Javid said this morning they were the “only way” to raise incomes.
A leading think tank claimed the impact on the poorest families is even worse, with inflation hitting 10.9% for the least well-off tenth of households.
This is because they spend a greater proportion of their income on food and energy, which are bearing the brunt of price rises – food prices alone have risen by 12.7%.
The richest households, by contrast, are only seeing rises of 9.4% according to the Resolution Foundation.
The TUC, the body representing the UK’s unions, says the new prime minister should “cancel” energy price rises due to take place in October.
“Families are facing a cost of living emergency. Ministers must cancel the catastrophic rise to energy bills this autumn,” said TUC general secretary Frances O’Grady.
“And to reduce future inflationary pressures and make energy more affordable, they should bring energy retail into public ownership.”
Alpesh Paleja, lead economist for the business group CBI, said: “The cost-of-living crisis is now very real for both households and businesses, so there needs to be a concrete way forward to support vulnerable groups with higher energy bills.”
James Smith, research director at the Resolution Foundation, said: “It will take many months, and much more living standards pain, before inflation starts to ease. So, the number one priority for the next prime minister will be to offer significant support to help millions of families through a brutal winter and beyond.”
The Taxpayers Alliance endorsed the need for tax cuts. Chief executive John O’Connell said: “The new Tory leader should remember that the best way to help taxpayers is by putting money back into peoples’ pockets through targeted tax cuts.”
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