Cities in the East Midlands are suffering higher rates of inflation and tighter squeezes on household finances than those in the South, as the cost of living crisis deepens inequalities across the country.
New research from Centre for Cities shows that inflation has already reached double figures in urban areas in the East Midlands, where rates are rising significantly faster than in the South.
This is having a disproportionate impact on household finances. Latest estimates show inflation has made workers in the East Midlands £117 a month poorer on average; while workers in the South have lost around £103 a month – adding up to a difference of £168 a year.
The concerning findings are published in Centre for Cities’ new report, entitled Out of Pocket: The places at the sharp end of the cost of living crisis, which for the first time compares the impact the crisis is having among cities and towns across England and Wales.
Leicester is the hardest hit in the East Midlands, with an inflation rate of 10.8 per cent, followed by Mansfield at 10.6 per cent and Nottingham and Derby at 10.5 per cent each.
Meanwhile, London and Cambridge currently face an annual inflation rate of 8.8 per cent each – meaning Leicester’s rate is around 23 per cent higher than in these southern cities.
In addition to the Midlands, cities in the North and Wales are also enduring higher inflation rates than in the South. Much of this disparity can be attributed to the fact that the North, Midlands and Wales have higher proportions of poorly-insulated housing and more reliance on cars, which leaves these areas exceptionally vulnerable to increasing fuel prices.
Research shows that eight out of the 10 urban areas with the highest energy costs just before the crisis hit were located in the North, Midlands, and Wales, with these cities already paying hundreds of pounds more than urban areas in the South.
For example, in Derby, annual energy bills in 2021 were £1,121 on average. This is significantly more than southern cities, such as Milton Keynes, where 50 per cent of homes have high energy efficiency and yearly bills were £889 on average. These differences will continue to grow as prices increase.
The Government recently provided £15bn to help ease the cost of living crisis but these figures show more needs to be done to support vulnerable households. In its report Centre for Cities calls on ministers to:
- Increase benefits to bring them in line with inflation;
- Reintroduce the £20 uplift for Universal Credit for the 5.9 million people currently on benefits;
- Provide those living in homes below EPC band C with a one-off payment to help them face soaring energy bills.
Centre for Cities Chief Executive Andrew Carter said: “The entire country has been impacted by the cost of living crisis but our research clearly shows some areas are being hit much harder than others. Worryingly, the North, Midlands, and Wales are struggling with higher rates of inflation that are further squeezing finances and leaving their residents hundreds of pounds worse off.
“These disparities prove that levelling up our cities to tackle spatial inequalities and futureproof the economy is more important than ever.
“In the short-term it is imperative that those most vulnerable are given the support they need to get through this crisis. Even while Westminster’s political situation is uncertain, ministers must act quickly to protect the areas most impacted and ensure they don’t fall even further behind.”
