Chancellor says emergency cost-of-living package will have 'minimal' impact on inflation
27.05.2022 - 11:27
/ manchestereveningnews.co.uk
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,