Inflation hitting rich and poor

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A study linking the cost of living with the spending patterns of 6,000 households found inflation rates for the poorest and most well-off virtually no different.

Soaring food and electricity bills make up a bigger share of the inflation rate of low-income households, which saw average prices rise 4.5% in the year to April.

But higher-income households spend more on items such as school fees and banking as well as motoring - which have also seen rapid price increases in recent months.

Average prices for the most well-off families increased by 4.4% over the same period, the ONS said.

Families of two adults and two children experienced the lowest price rises on average - 4.3% - although pensioners relying on state pensions or benefits for 75% of their income were hit by the highest rise - 5.1%.

The figures come as economists predict the Government's official benchmark of inflation - the Consumer Prices Index - to soar to 4.7% in August from 4.4% the previous month due to rocketing household energy bills and food prices.

This is more than double the Bank's 2% target and is set to prompt another letter from Bank Governor Mervyn King to Chancellor Alistair Darling explaining the rise.

The large jump in the cost of living has prevented Bank policymakers from cutting interest rates to aid a UK economy which many experts predict will slip into recession in the second half of 2008.