The UK government will need to spend a further £12 billion ($14.5 billion) on a support package for households to keep pace with higher-than-expected energy prices, the Institute for Fiscal Studies (IFS) said in a report on Monday.
According to the research, the money is required if the government still wants to provide the same level of aid it set out this spring.
In May, former UK Chancellor Rishi Sunak announced that the government’s aim was to make up for half of the cost of energy price increases to households. The effect of that support has shrunk as energy costs continue to soar. In May, energy prices were expected to rise by 95% in 2022-23, but are now expected to rise by 141%, according to the report.
The IFS said the cost of living is now expected to be 11.3% higher this financial year than last, with inflation peaking in the last quarter of 2022 at 13.1%.
The think tank warned that the poorest households will experience inflation of an “eye-watering” 18% in October due to energy price growth, compared to 11% for the richest households.