In every scenario outlined by the Bank, the rising cost of living – as measured by inflation – accelerates this year, with more uncertainty about what happens thereafter.
That is the result of rising energy prices which, in turn, push up the cost of people’s food shop.
The Bank thinks food price inflation could rise to 4.6% in September, and could go even higher later in the year.
Food and fuel are essentials. Everyone needs to eat and heat. So, lower-income households would be harder hit when these prices rise, because paying these bills takes up a greater chunk of their income.
The Bank points out that some people can use less energy, or they can dip into savings to pay higher bills.
That is a lot harder for lower-income families. During Covid lockdowns some families had managed to save. But now, compared with when prices soared in 2022, a greater proportion of lower-income households have less than two weeks of income saved, the Bank says.
Opportunities to borrow are greater, but that comes with its own challenges.