Record inflation ‘an all hands-on deck crisis’ for charities, economist warns

Charities are facing an urgent crisis of rising demand and falling incomes due to record inflation, with foodbanks and debt charities set to be among the hardest hit, an economist has warned.

Mental health and domestic abuse services charities will also be among the worst impacted as families come under increasing strain to pay escalating food bills.

The warning has been made by Jamie O’Halloran, an economist at think tank Pro Bono Economics, following latest official figures showing the UK has double digit inflation for the first time since 1981.

According to the Office of National Statistics the consumer price index rose to 10.1% in July, up on June’s figure of 9.4%.

Meanwhile, the Bank of England has warned that inflation could rise to more than 13%.

“This is an all hands-on deck crisis, with foodbanks, babybanks and debt charities experiencing the immediate impacts most intensely,” said O’Halloran.

“But the wide consequences of poverty mean that the majority of charities are now braced for rising demand, from mental health charities to domestic abuse services.”

Pro Bono Economics expects an average charity with an expenditure of £1m in 2020 would need to find an extra £113,000 by 2024 for staffing costs to tackle workers’ rising costs.

Costs are set to rise further in the autumn when the energy price cap is lifted.

“At a time of falling incomes and rising demand, that is simply out of reach,” said O’Halloran.

He added: “These latest figures confirm that the UK is now experiencing double digit inflation for the first time since 1981. This is driving a punishing cost of living crisis, with the threat of recession looming ever-nearer.

“As we approach the lifting of the energy price cap in October, the charity sector is braced for a swell in demand for its support from those most in need. But the sector itself is feeling the relentless squeeze of this crisis on its own finances.”

Earlier this week a coalition of 70 charities and community groups signed a letter to
Conservative Party leadership contenders Rishi Sunak and Liz Truss calling for support for government families to be at least doubled.

The charities, including the Joseph Rowntree Foundation, Trussell Trust and Save the Children UK, say the country is facing a “national emergency” due to soaring prices.