SCOTLAND is being hit “particularly hard” by the cost of living crisis, with cities north of the Border facing some of the highest inflation levels in the UK, according to new analysis.
The Centre for Cities think tank has warned there is a “clear geography” to the impact of soaring prices with poorer parts of the country more affected, which is deepening inequalities and worsening the north-south divide.
Glasgow had the second highest rate of inflation in the UK, reaching 12.6% in October, according to the centre’s cost of living tracker.
Households in the city paid an extra £55 on energy costs and £15 on petrol in the third quarter of this year, compared to the same time in 2021. Workers living in Glasgow were on average £138 a month poorer in July 2022 than the previous year,
Inflation is also hitting hard in Dundee, with a rate of 12.4% in October. Workers are on average £121 a month poorer, while households face paying an extra £57 on energy costs and £19 in petrol.
Other Scottish cities in the data include Aberdeen, which had an inflation rate of 11.3% and Edinburgh on 11.1%.
Overall, UK inflation hit 11.1% in October, the highest recorded in 41 years. But the tracker found the place with the highest inflation rate was in Burnley, Lancashire, at 13%. This was followed by Glasgow and Blackpool, both at 12.6%.
However the research says cities and large towns in the South have been “relatively sheltered” from rising costs, with the places with lowest inflation including London (10.2%), Cambridge (10.2%) and Reading (10.5%).
“Cities outside the South are suffering higher rates of inflation and tighter squeezes on household finances,” it noted.
Valentine Quinio, senior analyst at Centre for Cities, said: “This month’s inflation data shows that a number of Scottish cities, particularly Glasgow and Dundee, are among the most affected by the current cost of living crisis in the UK.
“Scotland, and most parts of the north of England, are hit particularly hard. That said, even within Scotland, regional differences persist: Edinburgh, for instance, sits at the other end of the spectrum.
“While inflation remains very high, it is relatively lower than in most parts of the country, and close to levels seen in London.”
The Centre for Cities’ cost of living tracker maps city-by-city inflation using data on spending, prices, energy bills and wages.
It said the major factors influencing differences across the UK include quality of the housing stock, with London and many other cities and towns in the south of the country such as Milton Keynes and Reading having more energy-efficient homes.
Londoners are also less reliant on cars and more likely to use public transport, reducing the impact of rising fuel costs.
Another factor is income levels, with poorer households tend to spend a much higher proportion of their disposable income on essentials, like groceries and fuel, making them more exposed to rising prices.
The think tank said that in London, groceries account for about 20% of the average shopping basket, compared to nearly 30% in Glasgow and Dundee.
The report comes as it is confirmed the UK is now in a recession and households are facing the biggest drop in living standards on record, with Chancellor Jeremy Hunt outlining plans for £55 billion of tax hikes and spending cuts in his Autumn Statement last week.
A bleak set of economic forecasts from the Office of Budget Responsibility warned that rampaging inflation as a result of the energy price shock meant living standards are set to fall by 7% over the next two years – taking them back to where they were in 2014.
Quinio said some of the announcements made in the Autumn Statement were welcome, particularly the support for household energy bills – although she noted it would become less generous from next April onwards.
“Also welcome is the announcement on a Retrofit Taskforce, which is long overdue in many parts of the country and will protect more households from further increases in energy prices in the future.
“However, the Chancellor’s plan to raise benefits by 10.1% from April will come too late for many vulnerable households already experiencing fuel poverty and facing a difficult winter.”
Hunt has blamed global factors are the primary reason for the high inflation and the squeeze on living standards, but economists warned a “series of economic own goals” has worsened Britain’s “long, hard, unpleasant journey”.
Paul Johnson, director of the Institute for Fiscal Studies, listed the self-inflicted wounds to growth as including Brexit, austerity-era cuts to education spending and Liz Truss’s disastrous mini-Budget, which he described as a “large own goal”, as well as the general political chaos of recent months.
