Jamie O’Halloran, Economist at PBE, said:

“Inflation has risen back up to 10.1% in the 12 months to September, up from 9.9% in August and returning to July’s 40-year high. This continues to be driven by rising food prices and is expected to persist for some time yet. As pay fails to keep up with inflation, rising interest rates will add a further cost of living squeeze on borrowers in the coming months.

“As a result, many charities are already seeing a marked increase in demand for help. Yet just as charities face rising levels of need, the pressures on household budgets mean people are reducing donations.

“New research by YouGov shows one in four current charity donors (26%) are giving less because of the difficult economic picture. Meanwhile, existing charity resources are stretching less far. We estimate that inflation over the last 12 months has eroded roughly half a month’s worth of charity reserves on average.

“This combination of constrained charity resources and heightened demand for help will only be compounded by the spending cuts the new Chancellor is expected to deliver in the fiscal statement due at the end of the month. It all adds up to a tough outlook for households and leaves the very charities that will be relied upon to provide support in a very precarious position.”

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