Einar H. Dyvik
Research expert covering Nordics and global data for society, economy, and politics
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 2025, 57 percent of UK households reported that their cost of living had increased compared with the previous month. 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.
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 took until May 2024 to reach the Bank of England's target rate of two percent. Furthermore, while wages are currently growing faster than inflation, this was not the case for twenty months between November 2021 and June 2023, when inflation consistently outpaced wage growth. Due to the crisis, real household disposable income in the UK fell by 2.2 percent in the 2022/23 financial year, representing the biggest fall in living standards since at least 1956.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 received a 400 British pound energy bill grant that Autumn, while around eight million low-income households were granted a 650 pound cost of living payment, that was 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 2023/24, although there was no energy bill grant, there was an extra cost of living payment worth 900 pounds for low-income households, 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.
