Money, in brief

Borrowing costing more

The US central bank raised its rate for the first time in three years. [1] A 30-year US mortgage passed 7% on 17 September. [8] In England, a ruling let five water companies charge more partly because their own loans cost more. [25][29]

Pay falling behind prices

Average US hourly pay, after prices, fell for a second quarter in a row between April and June. [14] The poorest third of UK households are forecast to end the decade with less income than they started it. [21] US food prices are up 33.4% since March 2020, against a 31.9% rise in hourly pay. [17]

The war in the price of food and travel

US airfares were 23.4% higher in August than a year before. [19] In March, Britain's biggest farmers' union warned that dearer gas would raise the price of greenhouse vegetables. [23] Diesel in the US passed $6 a gallon for the first time. [9]

Bills that rise on a schedule

Many English leases double the ground rent at fixed intervals, which can make a flat impossible to sell. [30] England's water regulator set bill rises for five years at once, most of it front-loaded. [25] US card rates follow the prime rate without anyone deciding. [4]

2 pressures seen across the day run through Money too.

• Drones and war cutting the supply of fuelHigh ↑ · seen in 4 beats→
• Central banks making borrowing dearerHigh ↑ · seen in 2 beats→

1. 1The US central bank raised its rate for the first time since 2023. Card interest follows within weeks; savings rates may not.
2. 2US pay slips behind prices again
3. 3Nearly half of US households fell short in 2024
4. 4US groceries steady, restaurant meals dearer
5. 5US travel costs 9% higher than a year ago

The next test is the US central bank's meeting on 27-28 October, where futures markets put the chance of another quarter-point rise at about 42%, and whether big banks lift savings rates before then. [1]

Also seen in Finance.

Average hourly pay in the US, adjusted for prices, fell between April and June, the second quarterly fall in a row, the Brookings Institution's pay tracker showed in August. [14]

That is true whichever of the two main price measures is used. [14] Most measures of pay after prices are still above where they were at the end of 2019. [14]

NPR reported that prices have been rising faster than average wages since April, as the war with Iran pushed fuel prices up. [9]

A pay rise usually comes once a year, so a worker absorbs every month of faster prices before it arrives.

A card's interest, by contrast, moves within weeks of a US central bank decision.

A card's interest rate is usually tied to the US central bank's rate, so it follows by itself. A savings rate moves only when a bank decides to move it.

the regulator fixed the rises for five years in advance, and an appeal added more because the companies' loans cost more, with no household asked

pay is a price an employer has to choose to raise, usually once a year, so the months of faster prices come first

a lease that doubles the rent every set number of years moves on its own, and the leaseholder has no say until a law changes the rule

Walmart chose to cut some prices only once shoppers began pulling back, the same step a bank takes with a savings rate when it starts losing savers

Online banks were paying about 4.2% in January because they compete for savers, so a savings rate can follow the US central bank when a bank has to fight for deposits.

After this rise the card side changes by itself within weeks, and the savings side changes only when a bank decides it should.

Nobody holding one account can see when that decision will come.

In 2024, 45.5% of US households did not earn enough to cover basic necessities, a Brookings Institution study found. [15]

It added up the cost of housing, food, childcare, health care and transport in every county and compared it with local incomes. [16]

More than 60% of households made ends meet in Colorado, the Dakotas, New Hampshire and Washington DC. [16] In Hawaii only 39% did. [16]

Wages rose 1.3% after inflation in 2024, according to the Census Bureau. [15]

It measures affordability from the income side as well as the price side. Its authors argue costs will not feel affordable unless wages rise substantially. [15]

US food prices were 2.7% higher in August than a year earlier, according to the consumer price index. [17] Grocery prices rose 2.2% over the year, while meals out rose 3.4%. [17]

Eggs, which soared during bird flu outbreaks in late 2024 and early 2025, were 23% cheaper than a year ago. [17] Beef was up 5.9%. [17]

In July, Walmart, the biggest US retailer, cut prices on beef, corn and other items as shoppers pulled back. [18]

Food is 13.4% of the US price index, second only to housing. [17] Since March 2020 food prices have risen 33.4% and average hourly pay 31.9%. [17]

Travel in the US cost 9% more in August than a year earlier, according to NerdWallet's travel price index. [19]

The index combines government price data on flights, hotels, meals out and car hire. [19] Airfares alone were up 23.4% on the year, while hotel rooms were up 2.9%. [19]

All prices together rose 3.4% over the same twelve months. [19] Over ten years, airfares have risen 15.6%, less than prices in general. [19]

Travel costs rose at more than twice the pace of prices in general this year. [19] The jump is recent: over ten years, airfares rose less than everything else did. [19]

A single adult of working age in the UK needs to earn 31,500 pounds a year to reach a minimum acceptable living standard in 2026, the Joseph Rowntree Foundation, a poverty research charity, found. [20]

A couple with two children needs 77,400 pounds between them. [20]

For the first time, the budgets assume private renting, because groups of the public said social housing was no longer a realistic option. [20]

A lone parent working full time on the National Living Wage reaches 67% of the minimum. [20]

Renting privately adds about 5,000 pounds a year to what a single pensioner needs. [20] Out-of-work benefits cover between 24% and 36% of the minimum after housing costs. [20]

The poorest third of UK households are expected to have lower incomes in 2029 than in 2019, the Joseph Rowntree Foundation calculated from official forecasts. [21]

Average household income after housing costs in 2029-30 would be only 160 pounds higher than ten years earlier, a rise of 0.4%. [21]

April 2026 is projected to be the decade's high point, with incomes falling by 580 pounds over the next three years. [21] Those forecasts were made before the conflict with Iran. [21]

Housing takes about a third of income for the poorest households, against a tenth for the richest. [21]

So a rise in rent or bills takes a bigger bite from the people with the least to spare.

UK food prices are on track to be about 50% higher than at the start of the cost of living crisis in 2021, the Energy and Climate Intelligence Unit, a research group, reported in May. [22]

Beef rose 64% and olive oil more than doubled. [22] The Bank of England expected food inflation to reach 7% by the end of the year. [22]

The fighting in the Middle East raised oil and gas prices, which feed into transport, fertiliser and greenhouse heating. [23]

Adjusted for average wages, food still costs 11% more than in 2021. [22] Families on the lowest incomes have little left to cut except food, the Food Foundation charity said. [22]

Ofwat, the water regulator for England and Wales, allowed companies to raise bills by 36% between 2025 and 2030, most of it in April 2025. [28]

Bills rose another 5.4% on average in April 2026. [24] Southern Water's average bill went from 704 to 759 pounds, after a 47% rise the year before. [27]

Five companies that appealed won an extra 2.2% on average. [25]

The appeal body, the Competition and Markets Authority, said one reason was that interest on the companies' own loans had risen. [29]

Households cannot choose their water supplier, so the whole rise lands on them. [25]

Complaints to the Consumer Council for Water rose 50% to more than 16,000 in 2025, mostly about affordability. [28]

A committee of MPs has asked the UK government to bring in its planned 250-pound yearly cap on ground rents in late 2027, not late 2028. [31]

Ground rent is a yearly fee a leaseholder in England and Wales pays the freeholder who owns the land under their flat. [31]

About 3.8 million homes still pay it, more than 600 million pounds in 2025. [32] Many leases double it or raise it with inflation at fixed intervals. [30]

The UK government plans to cut it to zero after 40 years, and the committee asks why that cannot take 20. [31]

A lease that doubles the rent can make a flat unsellable, because lenders will not offer a mortgage on it. [30]

The Residential Freehold Association, which speaks for professional freeholders, calls the cap wholly unjustified. [30]

Leaseholders in England also pay yearly service charges for repairs to their building, set by a managing agent the freeholder picks. [33]

One London leaseholder told the BBC her charges were about 2,600 pounds a year when she moved in, and one year they topped 5,400 pounds. [33]

Another bought a flat in 2020 expecting building works to cost 4,500 pounds; the bill grew to 40,000 pounds and she cannot sell. [34]

The housing minister said a ban on new leasehold flats is unlikely before the next election. [35]

Reform plans would abolish forfeiture, where a freeholder can take a home over a service charge debt above 350 pounds. [32]

Until then, the owner of the flat pays bills they have no say in. [33]

Deliberately underpaying workers became a crime in Australia on 1 January 2025. [36]

In the first 15 months the Fair Work Ombudsman, the Australian government's workplace watchdog, reported two criminal investigations and no prosecutions. [36]

Enforcement relies on workers complaining, and the most vulnerable complain least. [36] One survey found a third of workers aged 18 to 30 were paid well below the minimum wage. [36]

A Senate inquiry and a separate government review are examining the law. [36]

In the 7-Eleven case of 2015, workers were repaid more than A$170m while penalties came to about $1.8m. [36]

A law nobody is prosecuted under changes little for the worker who is short-changed.

Two thirds of temporary visa holders working in Australia were paid less than they were legally owed, a survey of almost 10,000 of them by the Migrant Justice Institute found. [37]

About 80% were international students. [37] More than a third were hired as independent contractors, four times the national rate, and 85% of those earned less than a casual employee would. [37]

Cash-in-hand pay fell from 44% in 2016 to 23%. [37]

The researchers suspect many cafes, shops and cleaning firms hire migrants as contractors to avoid minimum wages, extra pay for late hours and pension payments, which breaks the rules on who counts as an employee. [37]

They call it a business model, not a few bad employers. [37]

Nigeria's tax reforms for 2026 charge no value added tax, a sales tax, on basic food, education, medicines, baby products and sanitary pads, BBC News Pidgin listed. [38]

Rent is exempt from it. [38] Salary payments and electronic transfers under 10,000 naira are exempt from stamp duty, a tax on transactions. [38]

Small companies, with a turnover up to 100 million naira and limited fixed assets, pay no company tax. [38]

A sales tax takes a bigger share from a poor household, because more of its money goes on food and basics.

Removing it from those goods reaches families every time they shop.

An International Monetary Fund study of Turkiye found that prices for services, with rent playing an important role, have kept rising much more stubbornly than prices for goods since late 2021. [39]

When the lira stabilised at the end of 2022, goods inflation fell. [39] Services inflation kept climbing. [39]

A fall in the currency moves service prices only about a tenth as much as it moves goods prices. [39]

Goods prices react quickly when the currency moves. Service prices, rent among them, kept climbing, so tenants in Turkiye went on paying more after the lira calmed. [39]