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Rishi Sunak’s £15bn cost of living package may only be a temporary plaster, the CEBR think tank warns.
CEBR says the measures will help struggling families in the cost of living crisis, but more would be needed next year unless energy prices fall back:
Under the support measures announced this spring (both in February and this month), bottom-income-decile households in England are estimated to receive just under £1,200 in help, more than £800 of which comes from the latest package. As such, the support announced will go a significant way in protecting the very poorest from the energy price shock.
However, further targeted support will likely be needed if prices do not fall in spring 2023, meaning that the sizeable spending commitments made so far this year may prove to be a temporary plaster.
With better off households more able to absorb higher the cost of higher food and utility bills, much of the £6bn spending is likely to be unnecessarily burdensome on the public purse.
It may also risk stoking a certain degree of demand-pull inflation in 2023, a development that will be closely followed by observers including the Bank of England. Having said that, the support will be welcomed by those on moderate incomes, whose lifestyles are likely facing a considerable blow from continued energy price rises.