Chancellor Rishi Sunak has said his new emergency cost-of-living package will have a “minimal” impact on inflation which will be “much less” than 1%.
He told Sky News: “Our estimate, and my view, is it will have a minimal impact on inflation." Asked if it could be as high as 1%, he replied “no, much, much less than that, minimal”.
He argued that was the case because the help is “very targeted” at those who need it most while money is being raised to pay for the measures. Last week (18 May) the Office for National Statistics announced that inflation had surged to 9% - the highest level in 40 years.
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The hike, which has risen from 7% since March, means that the cost of living increases even further and people's money won't travel as far. During his emergency cost of living statement on Thursday (26 May), Mr Sunak said the Bank of England expects the rate of inflation to average around 9% this year.
Covid, the war in Ukraine and lockdowns in China have contributed to this, he added. Mr Sunak also introduced three key measures to help struggling households through the worsening cost of living crisis.
A windfall tax on soaring oil and gas firm profits will be imposed, with the funds raised helping to create a support package for those hit by rising bills. A rate of 25% will be charged to companies via a temporary energy levy, which the Chancellor claims will increase investments.
Around eight million households will receive a one-off cost of living payment of £650, which will be paid in two lump sums by the DWP. And finally, the £200 'loan' payment to help towards energy bills has been scrapped and replaced by a £400 grant, meaning it won't need to be paid back. The payments will be made universally.
The new support announced totals £15bn, Rishi Sunak said. It brings the total amount spent, including the measures rolled out earlier this year, to £37bn. Mr Sunak has not ruled out returning next year with another emergency package to ease the pain from soaring energy bills.
He told BBC Breakfast: “We are sitting here in May, we don’t know what energy bills will be next April. I think people can judge me by my actions over the past couple of years. I’ve always tried to be responsive to the situation that the country and the economy is experiencing, we’ll always act like that.”
Meanwhile on ITV's Good Morning Britain, he suggested wealthy individuals who do not need the £400 energy bills grant can “join me” in donating the sum to charity.
