UK set to rule on inflationary impact of energy support

A warning label is seen on the front of a gas meter at a house in Manchester, Britain, September 18, 2021. REUTERS/Phil Noble

LONDON, Aug 8 (Reuters) – Britain’s statistics agency will rule at the end of this month on whether an energy bill rebate offered to households by the government will directly feed into the country’s inflation statistics, the Office for National Statistics said on Monday.

Economists and bond investors are closely looking at whether the ONS treats the support packages as price cuts for consumers that will have the effect of lowering headline inflation rates.

Britain’s finance ministry announced in May it would double an energy bill support package to 400 pounds ($485) per household and remove a requirement to repay it.

The ONS said it aimed to complete a review of the Energy Bills Support Scheme (EBSS) this month and decide whether it will be considered in inflation statistics.

“If so, the ONS will consider how the treatment can be consistently incorporated into those statistics. Further information about this aspect is also expected to be announced on 31 August 2022,” it said in a statement.

Britain’s government says it has provided households with cost-of-living support worth 37 billion pounds, although this figure excludes the impact of some recent tax increases.

The level of support is likely to rise after the conclusion of the Conservative Party leadership contest that will determine Britain’s next prime minister, although by how much is unclear with the two remaining candidates proposing different remedies for the cost-of-living squeeze.

In the meantime, millions of households are facing financial hardship with inflation on course to surpass 13% this year, according to the Bank of England. read more

Last week the National Institute for Economic and Social Research NIESR said the number of households with no savings was set to double to 5.3 million, or one in five, by 2024, while some 1.2 million of them will enter destitution. read more

($1 = 0.8253 pounds)

Reporting by Andy Bruce
Editing by William Schomberg

Our Standards: The Thomson Reuters Trust Principles.