Cost of living crisis in the UK - Statistics & Facts
Households in the United Kingdom have experienced a significant fall in living standards since late 2021. As of January 2024, just over half of UK households were still reporting that their cost of living had increased compared with a year earlier. Although this was down from a peak of 91 percent in the Summer of 2022, it is evidence of a persistent problem facing the country. The households that are facing increasing prirces mainly attributed this increase to higher food, electricity, and fuel costs. The crisis is even more acute for the poorest UK households, which typically spend a higher proportion of their income on food and housing costs. Based on forecasts from the 2023 Autumn Budget , real household disposable income in the UK fell by 2.2 percent in the 2022/23 financial year, and will fall by 0.8 percent in 2023/24, and by 0.5 percent in 2024/25.
The war in Ukraine has also exacerbated inflation woes, particularly in relation to food and energy, the two sectors driving much of the high inflation. Among the most concerning issues arising from the war in Ukraine, 60 percent of people in the UK ranked its impact on the cost of living as a top three issue, second only to the threat of nuclear war. Energy prices in particular hit UK households hard in 2022 and 2023, especially following sigificant increases to the energy price cap (a mechanism to limit what suppliers charge per unit of energy) from April 2022 onwards. In May 2022, approximately 67 percent of UK adults also thought Brexit was making living costs higher, with five percent believing it was making them lower.
Many, however, feel that the government's reaction to the crisis falls short, with almost half of UK adults saying they were "highly dissatisfied" by the government's response. Actions people in the UK are taking to save money in the meantime include turning lights and other electronic devices off to save money, as well as eating out less. In the long-term, people are putting off big purchases and generally spending less on items such as clothing.
Reasons for the cost of living crisis
Although the UK economy returned to growth in 2021 and avoided high levels of unemployment, inflation reached levels not seen for decades in 2022. The CPI inflation rate reached a peak of 11.1 percent in October 2022 and did not fall below double figures until April 2023, and as of December 2023 was still at the relatively high rate of four percent. Furthermore, while wages are currently growing faster than inflation, this was not the case for 20-months between November 2021 and June 2023, when inflation consistently outpaced wage growth.The war in Ukraine has also exacerbated inflation woes, particularly in relation to food and energy, the two sectors driving much of the high inflation. Among the most concerning issues arising from the war in Ukraine, 60 percent of people in the UK ranked its impact on the cost of living as a top three issue, second only to the threat of nuclear war. Energy prices in particular hit UK households hard in 2022 and 2023, especially following sigificant increases to the energy price cap (a mechanism to limit what suppliers charge per unit of energy) from April 2022 onwards. In May 2022, approximately 67 percent of UK adults also thought Brexit was making living costs higher, with five percent believing it was making them lower.
Response to the crisis
In May 2022, the UK government announced a series of support packages to help deal with the crisis. All UK households will receive a 400 British pound energy bill grant in the Autumn, while around eight million low-income households will receive a 650 pound cost of living payment, to be paid in two installments. Further measures included a 150 pound rebate on council tax as well as extra winter fuel payments of 300 pounds, and an additional disability benefit payment of 150 pounds. In 2023, although there was no energy bill grant, there was an additional cost of living payment worth 900 pounds for low-income households, to be paid in three installments, while the extra winter fuel payment and additional disability benefit payment were both repeated for the same value as in 2022.Many, however, feel that the government's reaction to the crisis falls short, with almost half of UK adults saying they were "highly dissatisfied" by the government's response. Actions people in the UK are taking to save money in the meantime include turning lights and other electronic devices off to save money, as well as eating out less. In the long-term, people are putting off big purchases and generally spending less on items such as clothing.
