(Bloomberg) -- The cost of the cheapest brands of food and drink in the UK surged more than that of premium brands over the past two years, leaving the poorest people in the country shouldering the highest burden from inflation, an analysis showed.
The Institute for Fiscal Studies said that the price of the least expensive goods in grocery stores jumped 32.6% from 2021 to 2023. That was about double the pace of the 15.8% increase recorded for the most expensive products.
The figures mean that households in the bottom quarter of spending power paid about £100 ($127.92) a year more for groceries. It underscores how the worst bout of inflation in four decades widened inequality and worsened the finances of those least able to cope. The IFS dubbed the trend “cheapflation,” where the cost of goods that once were inexpensive rockets.
“Widespread ‘cheapflation’ pushed up the price of the most inexpensive varieties of grocery products over the last two years,” Tao Chen, an IFS research scholar, said in a report released Wednesday. “This hit poorer households harder.”
Inflation tracked by the Consumer Prices Index touched 11.1% in late 2022, triggering the quickest series of interest-rate increases from the Bank of England in decades. While both inflation and rates have since eased, consumers are still feeling the pinch from the cost-of-living squeeze.
Official figures due out Wednesday are expected to show inflation crept up to 2.3% in July from 2% in each of the two previous months. A separate report published by Yorkshire Building Society and Public First showed that almost a third of younger people in Generation Z — those aged 16 to 27 — can’t afford a £100 increase in expenses.
Food and drink prices rose at roughly double the rate the headline inflation index. But IFS found that there was a big variation between the price moves for the cheapest types of goods like pasta, butter and milk when compared with premium brands.
“Differences in the rates of inflation across cheaper and more expensive varieties of the same product categories accounted for all of the difference in the inflation rates experienced by rich and poor households,” IFS said in its report.
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