A new estimate suggests five years of pressure on living costs have left the typical British household £2,900 ($3,840) worse off.
According to a Resolution Foundation analysis, price growth in the United Kingdom accelerated so sharply that five years delivered the equivalent of about 13 years of normal inflation. That squeeze has pushed many families to cut back on basics, including heating.
Here's what to know
According to The Independent, the think tank said households would be in a stronger financial position now if inflation had stayed closer to normal levels. The strain can be traced to a prolonged burst of price increases caused by the pandemic and by wars in Ukraine and Iran.
Lower-income families have been hit particularly hard, with 18% of low-income households behind on priority bills such as rent, water charges, council tax, and energy costs. That is nearly double the share recorded in 2020.
The Resolution Foundation's chief economist, James Smith, said: "While the hit to incomes from rising prices has been felt right across the board, the hardship has not been equally shared.
"It is poorer families who have cut back hardest on heating and are falling behind fastest on essential bills, and the conflict in the Middle East is set to keep energy prices high."
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More background
Energy costs have been a major part of the problem. The study found that about 1.7 million more families couldn't keep warm enough in 2022-23 than in 2021-22, highlighting how higher utility bills forced tougher household trade-offs.
Pressure is building as Chancellor John Healey prepares his first budget. After Prime Minister Andy Burnham pledged to provide "breathing space" for families facing persistently high bills, the government is under renewed calls to offer more cost-of-living support.
At the same time, The Independent reported that the war in Iran and a global bond sell-off have driven up borrowing costs, tightened public finances, and could limit how much help ministers can provide, even as many households continue to struggle.
What's being done?
While arguing that support is still needed, Smith said it is required "just when the public finances leave less room than ever to provide it" and warned against repeating the blanket support package used in 2022.
He prefers a more targeted approach aimed at households under the greatest strain, especially those struggling to pay for heating and electricity. As Smith put it, "any new help must be squarely targeted at the poorer families facing the greatest hardship — starting with their energy bills."
Hannah Spencer, a Green Party member of Parliament, is also calling for a broader response that goes beyond short-term relief. She said that this should include shifting more costs off energy bills, properly funding a national home insulation scheme, clamping down on "huge profiteering" by energy companies, and rapidly scaling up cheaper, cleaner energy.
"The budget will fail families unless we start to see a proper plan to address the cost-of-living crisis," Spencer said.
Where can I learn more?
Rising energy, food, and climate-related costs are putting similar pressure on households elsewhere, too. These stories cover how families in California, Australia, Somalia, and Pakistan are being squeezed, and the policy choices shaping food inflation.
• In California, climate change is a kitchen-table issue driving up household costs.
• In Australia, climate-fueled costs mean the burden is even heavier for struggling families.
• As food prices climb, economists warn politicians remain ill-suited to tackle inflation's deeper causes.
• In Somalia, drought and conflict are pushing families deeper into crisis through rising food prices.
• In Pakistan, homeowners turned to rooftop solar as devastating energy prices battered family budgets.
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