Pressure builds on Sunak to act now on living costs

Pressure builds on Sunak to act now on living costs
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The chancellor must act now and not wait for the Autumn Budget to help people with the soaring cost of living, say business groups and unions.

The Confederation of British Industry said: "There are some choices about what you do now and what you do later. You have to help the hardest hit now."

Rishi Sunak has said the government will act where it can but said it will not be easy to cut costs for families.

UK inflation is at a 40-year high of 9% as energy, food and fuel prices soar.

Mr Sunak told the annual CBI dinner on Wednesday evening that the government was "ready to do more" to aid households.

It is understood that he is considering ways to help people with their energy bills in July or August as well as announcing tax cuts in the Autumn Budget to support businesses.

But Tony Danker, director-general of the CBI, told LotterryTreasure Radio 4's Today programme it was important to act now.

"Helping people with heating bills and eating bills will not fuel inflation and you need to stimulate business investment now. That's not going to overheat the economy, it is going to make sure that any downturns in our fortunes will be short and shallow because growth is coming soon."

The inflation rate in April reached its highest level since 1982, while recent data showed the UK economy shrank in March, raising concerns the country is heading for a recession.

The TUC's Kate Bell urged the government to increase state benefits now as opposed to next April and dismissed claims that .

"What I think we saw during the coronavirus crisis was when the economy is in trouble or when we're facing an emergency we do need to protect people and that is the best way to protect the economy.

"I think that is what we need to see now and when people hear the government saying 'the computer says no', I think they are pretty clear that is an excuse, we can act if we want to," said Ms Bell.

Energy soars

The prices of fuel, energy and food have surged in recent months, driven in part by the Ukraine war which disrupted global commodity supplies.

In April, gas and electricity prices had the biggest impact on inflation after a higher energy price cap - which limits the price per unit that suppliers can charge customers - kicked in. It means that homes using a typical amount of gas and electricity are now paying £1,971 per year on average - up £700 from the previous cap.

On Wednesday, Citizens Advice said "the warning lights could not be flashing brighter" and the government needed to offer households more support.

Its boss Dame Clare Moriarty said people were in "desperate" situations, with "parents skipping meals to feed their kids" and "people washing in their kitchen sinks because they can't afford a hot shower".

Meanwhile, petrol and diesel prices hit new records of £1.68 and £1.81 per litre in April and the RAC said a family car that used diesel now cost nearly £100 to fill up.

"While wholesale prices dropped on Wednesday, indicating we may have passed the peak, drivers should brace themselves for further pump price rises as retailers who have had to buy new stock this week pass on their increased costs in the coming days," said RAC fuel spokesman Simon Williams.

"Drivers badly need further help from the government, particularly as the Treasury is benefitting considerably from the windfall that 20% VAT brings them on these record high prices," he said.

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