Jansev Jemal, Director of Research and Policy at Pro Bono Economics, said:

“Inflation has dipped slightly to 10.1% in the 12 months to January, down from 10.5% in December. Nevertheless, these historically high levels continue to put a significant strain on household budgets.

“Last month, Citizens Advice recorded a record high for the number of people it referred to food banks and charity support – an increase of 29% from January last year and a 67% increase on referrals in January 2021. As households squeezed by inflation turn to charities in unprecedented numbers, these charities are also having to cope with their own ever-rising costs.

“The impact of inflation is not only felt by charities in frontline costs and the dwindling value of donations, but also through the drag on staff pay. New Bank of England figures show that annual wage growth in the charity sector is seriously lagging the rate of growth in the private sector – up only 4.8% for charities, compared to 6.4% for businesses, as of December 2022. Lagging pay may fuel burnout and recruitment difficulties for charities at just the moment when demand for their support climbs ever higher.

“As the Chancellor prepares to deliver his Budget next month, it is vital that the plans involve targeted support for the most vulnerable. It also important that charitable foundations and other major funders step in to ensure that the social sector has the resources it needs to help communities cope during this challenging period.”