Why aren't cost of living payments made in one go?published at 13:00 British Summer Time 20 July 2022

13:00 BST 20 July 2022

Kevin Peachey
Personal finance correspondent

Alex asks why cost of living payments couldn't be made in one transaction so people on low incomes aren't left waiting.

The first instalment of cost of living payments to people receiving benefits and on a low income started to be paid on 14 July.

The Department for Work and Pensions always said there would be a steady start but, apart from a tiny proportion of complex cases, all eight million recipients would get the money by the end of July.

Clearly, the earlier it arrives automatically into accounts the better for people for those who need it now.

The DWP has faced criticism recently over errors in pension payments, so it will want to get this one right.

Why are all pensioners getting a cost of living payment?published at 12:51 British Summer Time 20 July 2022

12:51 BST 20 July 2022

Kevin Peachey
Personal finance correspondent

Our personal finance correspondent Kevin Peachey has been answering some of your questions on the cost of living crisis. Our first question comes from David Morris, who asks why all pensioners are getting a payment to help with the cost of living, when many are still working or receiving a pension.

Pensioners who already receive the Winter Fuel Payment – worth about £200-£300 – will automatically get an additional £300 this November or December.

The reasoning is that older people are more likely to need their heating on higher and for longer and it is getting a lot more expensive.

As David correctly points out, there is a wide range of incomes among pensioners, as there is within the rest of the population.

Ultimately, the targeting (or lack of it) in the cost of living payments was a political decision. Initially, the government promised universal financial support, but moved on to payments directed more specifically to those on lower incomes.

Image source, Getty Images

Thanks for joining our live coverage of cost-of-living pressures in the UK. Here's a recap of what's been happening today:

• The inflation rate has jumped to 9.4% in the twelve months to June, says the Office for National Statistics
• Prices of everyday goods are rising faster than they have done for 40 years
• Chancellor Nadhim Zahawi says the government is working alongside the Bank of England to "bear down" on inflation
• Labour accuses the government of a decade of economic "mismanagement" and has called for urgent action
• The BBC has been speaking to people in Derby about the cost-of-living crisis, as the city is a fairly typical example of what’s happening in the UK

We'll also be answering some of your cost-of-living questions shortly. Stay with us.

Countries around the world are grappling with rising prices - but inflation in the UK (9.4%) is higher than in the US (9.1%) and the eurozone (8.6%).

Paul Dales, from Capital Economics says prices are rising for two main reasons - the surge in energy costs and the tight labour market, with businesses finding it hard to get hold of the workers they need.

He says the eurozone has the first factor but not really the second, while the US has the second but not really the first. The UK has both.

The UK is more exposed to the previous surges in wholesale gas and electricity prices than the eurozone because those governments have done more to prevent them feeding into higher bills for households, he explains. For example, France has frozen utility prices for this year.

The UK's Ofgem price cap also means the upward pressure on UK inflation comes through after a delay and then suddenly all at once, when the price cap is raised at certain points in the year.

While the UK's labour market is just as tight as in the US, Dales says it seems UK workers are more able to bargain for higher wages.

Niamh Toner, who lives with her partner and their 14-month-old son in Derby, is one of those struggling with rising prices.

"We decided it's better if I have a phone contract that's a bit higher with the mobile data coverage to hotspot instead of using wi-fi, then it works out cheaper," says the 23-year-old.

"It makes it tricky with the baby monitor - but we couldn't afford the £25-a-month bill for broadband."

The family, who have a household income of £20,000, also keep the boiler off most days to save on their energy bills - which are currently £270 a month.

Read more from Niamh's story here.

Derby is a city that is diverse, resilient and proudpublished at 12:10 British Summer Time 20 July 2022

12:10 BST 20 July 2022

Navtej Johal
Midlands Correspondent

When most people think of the Midlands, they’ll think of Birmingham, perhaps Leicester or Nottingham at a stretch. Derby is a city that often feels left out of the national conversation.

A political bellwether, the party leading Derby City Council tends to change hands in line with the national picture, as does the Derby North MP.

It's a city with pockets of affluence and pockets of deprivation. It voted for Brexit. It's diverse, resilient and proud. It was home to the world’s first factory and has an impressive reputation for manufacturing, particularly due to the success of Rolls-Royce, which has its headquarters in the city and is its biggest employer.

We're bringing you the stories of the ordinary people in Derby trying to make ends meet in extraordinary times.

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Image source, Getty Images

Some help for small businesses, following this morning's news of a jump in the inflation rate.

A government scheme offering post-Covid loans to small businesses has been extended for two more years, Reuters reports.

The move means the government will continue "stimulating local communities, creating jobs and driving economic growth in the UK," Business Secretary Kwasi Kwarteng is quoted as saying.

The Recovery Loan scheme was launched in April 2021 to help businesses recovering from the pandemic.

Kevin Peachey
Personal finance correspondent

Image source, Getty Images

We are concentrating our coverage in Derby today – and if you want to buy a home in the city, then you might want to look away now.

Property prices in the East Midlands are rising faster than all but one other region in England, and faster than Wales, Scotland and Northern Ireland.

The average home in the East Midlands cost 15.2% more in May than it did a year earlier, according to official figures published by the Office for National Statistics today, external.

Overall, UK house prices rose by 12.8%, or a £32,000 increase compared with a year earlier. Prices are rising fastest in the South West of England, which recorded a 16.9% annual increase.

Food and fuel costs were the biggest contributors to inflation this month - but some items have gone up more in price than others.

Here are a few examples of products which have seen among the largest increases in price in the year to June:

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Kalwinder Singh Dhindsa lives in Littleover, Derby with his wife and two children. He says people in the South Asian community don't talk about it if they are struggling financially.

"It's the taboo, the stigma of putting your hand up and asking for help. They tend to keep it to themselves. They tend not to share it. People are proud and they just don’t want it to get out that such and such has a son or daughter struggling – it reflects badly on their family."

Talking about unexpected costs they've been hit by such as school trips, the 42-year-old says it's the "squeezed middle" that are forgotten about.

"We all feel the pinch," he adds. "These recent months have hit everyone, some harder than others. With my family, probably not as hard as others. There might be people from my community who are worse off than me but they just refuse to do as I'm doing – talk.

"We've all got a different story. If I'm telling my perspective and how it is for me, I'm hoping that others might think, 'you know what, maybe we need to talk and engage with our family members and other members of the community and organisations to get the assistance we need'."

Image source, Getty Images

As we've been reporting, the UK's inflation rate has hit 9.4%. That means the prices of everyday goods are continuing to rise by the highest amount for 40 years.

Understandably, a lot of you want to know when that rate will come down again.

Sadly, the Bank of England expects things to get worse before they get better. It thinks inflation will hit 11% later this year before slowing next year.

The current drivers of inflation are not expected to last. The situation has been caused by the Covid crisis, the Russian invasion of Ukraine and domestic factors.

The Bank is also taking its own action by raising interest rates.

It expects the rate of inflation to be more like 2% in 2024.

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Image source, PA Media

The Tory leadership race continues - and the eventual victor is being urged to "get their house in order" and tackle inflation when they become the UK's new prime minister.

The British Chambers of Commerce (BCC) calls on the government to "send business a clear signal that despite political upheaval it can still take action on the economy."

The BCC adds that a new Budget in the autumn provides the chance for a "reset".

Victoria Fritz
BBC business reporter

Many businesses are also struggling with soaring costs. Edd Cuncliffe works at a same-day courier business outside Derby.

He's seen a 39% increase in fuel costs which means an extra £300,000 in costs over the year to his business. Wage bills have also gone up for his 80 staff and he’s had to introduce a fuel surcharge for customers.

"Something has to change. It feels like we are at breaking point and we can’t just have businesses going under especially after the last few years," he says.

Image source, EPA

Tory leadership hopeful Penny Mordaunt says the latest inflation figures show a need to "act now and not sit on our hands".

Later today Conservative MPs are to vote for one final time to decide which two leadership candidates should go through to the run-off vote among party members.

Only Rishi Sunak, Liz Truss and Mordaunt remain in the race after Kemi Badenoch was eliminated on Tuesday.

Reacting to this morning's latest increase of inflation, Mordaunt says the rise "justifies fully" her planned economic measures of targeted tax cuts.

"We need to act now, and not sit on our hands by proclaiming we have done enough, during the height of this crisis, and come this autumn, to help people pay their bills," she says.

You can read more about the latest developments in the Tory leadership race here.

Fuel costs were among the biggest contributors to the increased inflation rate last month, with petrol prices seeing their largest monthly rise on record.

The price of petrol and diesel have been rising for several months, driven partly by the war in Ukraine, although fuel prices were already increasing before then.

This is because the price of crude oil, which is used to make petrol and diesel, has gone up. While it was cheaper at the beginning of the pandemic, as many businesses temporarily closed and demand collapsed, prices have increased as demand has returned to normal.

Meanwhile, Russia is one of the world's largest oil exporters but as countries have moved to phase out Russian imports demand for other producers has increased, leading to higher prices.

Petrol prices at the pumps did fall from their record highs earlier this week, after wholesale prices dropped. But analysts are warning prices are likely to remain high due to the ongoing conflict in Ukraine.

Read more: Why is petrol so expensive in the UK?

Abbie Tabberer, from the Chaddesden area of Derby, has Ehlers-Danlos syndrome and is struggling to afford the fuel costs for travelling to her medical appointments in London.

The 31-year-old, who uses a wheelchair, says: "We have to travel regularly to lots of different hospitals. My disability vehicle is diesel so you’re talking £60 to £70 a trip there and back, which is a phenomenal amount of money.

"My fear is I won't get to these appointments and that’s really scary because they’re the only medics that know how to look after me."

She says after she's bought dressings for her feeding tubes and Micropore tape - which has more than doubled in cost from £1.79 to nearly £4 – she's on a "shoestring".

Abbie lives with her parents and says they have cut down to one shower a week due to their rising electric bill.

"We'll get through it, but right now I'm not sure how."

Aftab Gulzar
BBC Radio Derby Editor

Derby is special to its residents but it’s also quite average in various ways, making it a fairly typical example of what’s happening in the UK with the cost of living crisis.

We have middle-class families with parents employed by big firms like Rolls-Royce and Toyota but also record numbers using foodbanks. In comparison to other places, salaries compare favourably to house prices, but many are struggling.

Located in the Midlands, being on the Midland Mainline and CrossCountry line and just off the M1, Derby is well connected. It doesn’t have the wealth or expense of bigger cities but nor does it have the unemployment issues seen elsewhere.

There's real ethnic diversity too, with a large South Asian community and a growing Eastern European population. On one local high street, more than 50 languages are spoken, exemplifying why Derby is a good place to understand the impact of the cost of living on different communities.

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Image source, PA Media

As we've been reporting, the UK inflation rate has hit 9.4% in the year to June, with prices rises at their fastest rate in 40 years.

Off the back of this and as part of its Counting the Cost of Living series, BBC News will be asking people from towns and cities around the UK how they are coping - and revisiting them over the coming months.

We'll be going to 12 different locations to speak to households, businesses and families to find out how the rise in living costs is affecting you.

We've started in the Midlands with Derby, but will also be speaking to people in Gloucester, Croydon, Ipswich, Ilfracombe, Bolton, Hawes in Yorkshire, Sunderland, Lurgan in Northern Ireland, Newtown in Wales and Arbroath and Dumbarton in Scotland.

If you'd like to share your story with us, please get in touch at haveyoursay@bbc.co.uk, external

We heard earlier from Labour Party chair Anneliese Dodds, has called for immediate action from the government to tackle UK inflation.

Dodds told BBC Breakfast taking VAT off bills and bringing in mass home insulation could ease pressure.

As we mentioned earlier, Chief Secretary to the Treasury Simon Clark has been talking to BBC Breakfast about how high pay deals could impact inflation.

Clark has said setting high pay deals runs the risk of 'baking in' UK inflation - as the rate at which prices are rising jumped to 9.4% in the year to June.

He has argued a balance needs to be struck between looking after the workforce and running the risk of making inflation worse.