Inflation affects everyone in the UK, but changing prices have different effects on the inflation rates faced by people on low and high incomes because of variations in the goods and services they buy.
With the recent rise in the RPI to 3.5 per cent and the current forecast to remain above three per cent into 2019, latest figures show that people’s wages are three per cent lower than they were a decade ago.
But with childcare prices rising to seven per cent in a year, parents are being hurt the most.
The Family & Childcare Trust Childcare Survey results published recently reported the average price for a part time nursery place for a child under two has risen to a whopping £122 per week, over £6300 per year.
Following the roll-out of new government support schemes in 2017, most parents are now entitled to some help with childcare costs, but the confusing issue is having seven different types of support means that parents are at risk of missing out on the vital help that they need. Many working parents using the new tax free childcare and the 30 hours’ free childcare offer for three and four-year-olds will be spending less on childcare this year, but savings could dry up quickly if prices continue to rise at the same rate.
Worryingly, families with lower incomes and younger children are the ones who are most likely to be squeezed by the price surge. The highest prices for childcare are for the youngest children between the end of paid parental leave and the child turning three and that’s when the least financial support is available to parents. Parents with children under three on lower incomes will not be receiving additional support this year through tax free childcare and so are likely to see their childcare costs rise.
Lower income families also risk being worse off despite working more hours. They can get help with childcare costs through the benefits system, but the average cost of a full time nursery place significantly outstrips the maximum support available by £60 each week.
But prices vary significantly across the country with inner London being the most expensive region in the UK – the price of a part time nursery place for a child under two is £184 per week, or £9,500 per year. This is compared to an average £102 per week in the north west, or £5,300 per year.
The full report can be found at https://www.familyandchildcaretrust.org/childcare-survey-2018
In summing, up the cost of different types of goods and services has changed in different ways, particularly since 2003, with the cost of electricity, gas and fuels rising so much faster than the rate of inflation. This has contributed to the poorest fifth of the population experiencing a higher rate of inflation than the rest of the country in most of the last two decades.
Rodney Sadd
Spalding
