| United Kingdom cost-of-living crisis |
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 A foodbank donation point in Sainsbury's, Slough, in June 2022 |
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| Industrial action |
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In late 2021, the prices of many essential goods in theUnited Kingdom began increasing faster thanhousehold incomes, resulting in a fall inreal incomes. The phenomenon has been termed acost-of-living crisis. It is due in part to theeconomic impact of the COVID-19 pandemic, includinga global surge in inflation, as well as the economic instability caused byBrexit and theRusso-Ukrainian war.
While all in the UK are affected by rising prices, the crisis most substantially affectslow-income persons. The British government has responded with measures including grants, tax rebates, and subsidies to electricity and gas suppliers. Regular pay began to outpace inflation beginning in May 2023,[1] but living costs have remained at elevated levels, and have continued to increase faster than headline inflation into 2025.[2] TheJoseph Rowntree Foundation projected in 2025 that disposable incomes would continue to decline for the rest of the decade.[3]
The Big Issue newspaper defines acost-of-living crisis as "a scenario in which the cost of everyday essentials like energy and food is rising much faster than average incomes".[4] TheInstitute for Government think tank defines the UK's cost-of-living crisis as "the fall inreal disposable incomes (that is, adjusted for inflation and after taxes and benefits) that the UK has experienced since late 2021".[5]
By January 2024, the 12-monthRetail Price Index had fallen to 4% after peaking at 11.1% in October 2022, while workers' wages had risen 6.2% in the last quarter of 2023.[6] In late 2023, theResolution Foundation estimated that household incomes would not return to pre-crisis levels until at least 2027.[7]
Both global and local factors have contributed to the UK's cost-of-living crisis.
According toBank of England governorAndrew Bailey, about 80% of the causes driving the cost-of-living crisis are global.[8] These include the various forms of instability the world has experienced in the early 2020s such as theCOVID-19 pandemic, achip shortage, anenergy crisis, asupply chain crisis,[9] andRussia's invasion of Ukraine.[10] In 2021, the UK's inflation was less than that of the US, but high US inflation was not generally experienced as a cost-of-living crisis due to the stimulus cheques that had been distributed to American households.[11]
Britain suffered from wage stagnation after 2008, which has been attributed to theausterity programme. There has been no other comparable period of economic stagnation in Britain since records began during theNapoleonic Wars. Pay stagnation was particularly felt among younger demographics in the 2010s, but was not considered a major political issue until later in the decade. The middle class was sheltered from the effects of this at the time due to near-zero interest rates, and it did not affect pensioners- the core base of the Conservative party- as this group was already retired. This contributed to a lack of urgency over the various Conservative led governments of the era. The government ofTheresa May did attempt to address this in the late 2010s with her targetting of those who could "just about manage" (JAMs), and stagnation was likely the impetus behindBoris Johnson's "levelling up" agenda.[12][13]
Other local effects include labour shortages related to foreign workers leaving due toBrexit, and additional taxes on households. Factors that have worsened the crisis since 1 April 2022 includeOfgem increasing the household energy price cap by 54%, an increase inNational Insurance and a rise inCouncil Tax.[4][8][9] Researchers in theCentre for Economic Performance at theLondon School of Economics investigated trade flows and consumer prices of food products in the UK and found Brexit increased food prices due to increased red tape when food is imported from Europe. This affected poorer households disproportionately.[14] Unemployed people in the UK receive lower fiscal support than the average forOECD countries, and UK salaries have not risen substantially since the2008 financial crisis.[15]
Insufficient long-term gas storage facilities resulted in the UK energy prices being overexposed to the market fluctuations.[16][17] Household income, whether from wages or benefits, have not generally kept pace with rising prices.[4][5][9] In April 2022, UKreal wages fell by 4.5%, the sharpest fall since records began back in 2001.[18] By July 2022, inflation had risen to over 10%, the highest level in 40 years, and theBank of England was forecasting it could reach 13% by the end of the year. Energy costs for the typical British household were expected to rise 80% from October 2022, from £1,971 to £3,549,[19] untilLiz Truss, who was Prime Minister at the time, announced measures to limit these increases.
On 23 September 2022, UK ChancellorKwasi Kwarteng announced hismini-budget, backed by Truss, which included widespreadtax cuts. The package included cuts to stamp duty and the abolishment of the 45% rate of income tax for those earning £150,000 or more a year. These cuts aimed to encourage foreign investment and economic growth but were not costed and spooked financial markets, causing the pound to fall to a low of $1.03. TheBank of England reacted by raising interest rates, causing mortgage payments to increase significantly. By late October 2022, Truss and Kwarteng had been replaced byRishi Sunak andJeremy Hunt, respectively, and all of the mini-budget's proposals had effectively been cancelled. The pound regained some strength by this point, but interest rates remained high,[according to whom?] stretching household incomes.[citation needed]
Inflation began rising sharply in 2021, affecting a wide range of goods and services. Transport costs have been especially affected, but also many others, including costs for food, furniture, household items, electricity and clothing.[9] TheFinancial Times reported in May 2022 that the crisis caused UKconsumer confidence to fall to its lowest level since 1974.[20] In June, charities had reported the crisis is affecting people's mental health, with one publishing a survey where 9% of responding parents had said their children had begunself-harming.[21][22] Based on anOffice for National Statistics (ONS) survey performed between 27 April and 22 May 2022, 77% of UK adults reported feeling worried about the rising cost of living, with 50% saying they worried "nearly every day". A separate ONS survey taken from 25 May to 5 June found 52% of respondents had cut back on their energy use.[23] While rising prices have affected all social classes, the poor have been impacted the most.[9] According to a survey by theFood Foundation think tank published in February 2022, one million UK adults went a whole day without eating over the past month.[24]
The ONS reported that in the year to September 2022 there was a 22% increase inshoplifting. In response to the problem, some supermarkets began to roll out newretail loss prevention systems, requiring customers to scan their printed receipt on anoptical scanner as proof of purchase before they can exit the store. The systems have attracted some negative public reaction.[25][26]
On 10 November 2022,nurses and other medical personnel across theNHS voted tostrike, under theRoyal College of Nursing. The nurses stated this was due to failing wages,inflation,overwork and underfunding. The industrial action affects NHShospitals throughout the UK. Nurses are still expected to work certain days at reduced-capacity to ensure the NHS is stilloperational.[27][28][29]
As lower income households spend a greater share of their income on food and energy, two of the more rapidly inflating areas, these households faced a higher effective inflation rate than the wealthy. In November 2022 this meant that the wealthier households were experiencing inflation of 9.6%, while poorer households experienced 12.5%. This gap in effective inflation rate by income bracket was the highest seen on record. Due to heating costs, the effective inflation rate for those aged over 80 was 15.3%[30] TheOffice for National Statistics (ONS) stated on 11 November that business investment fell during the three months to September and was below the pre-pandemic levels.Gross domestic product fell during the three months to September due to a decline in manufacturing "across most industries" according to the ONS.[31]
On 8 December 2022,The Guardian reported that according to research by theJoseph Rowntree Foundation, over 3 million[contradictory] UK low-income households could not afford to heat their homes. According to the research by the foundation, roughly 710,000 households had difficulty paying for food, heating and warm clothing. The foundation urged the government to increaseUniversal Credit. A government spokesperson said that support for the most vulnerable remained a priority and that millions of the most needy people were being given at least £1,200 in direct payments to protect them against rising prices in addition to the £400 being given to each household towards energy costs. The spokesperson said that the support also included a winter energy price guarantee worth approximately £900 for a typical household, and a household support fund was helping people with essential costs, and that the chancellor had announced further efforts to support those most in need in the following year.[32]
Unpaid energy bills controversially led to energy companies switching customers over to (more expensive)prepayment meters.The Times found that in some cases, energy companies forced their way into homes to install the hardware.Ofgem responded by temporarily banning the practice in February 2023, until new regulations were imposed in January 2024.[33] In May 2025, Ofgem announced that eight suppliers would pay compensation to 40,000 customers who had been affected by "inappropriate installation".[34]
The Joseph Rowntree Foundation said their research showed that hundreds of thousands of households could not afford to protect themselves from cold and that prices of essentials were rising steeply, with energy bills nearly double the level of the previous winter.[32] A briefing from the Department of Health and Social Care, detailing the plans they have made to take on thousands of volunteers to counteract staff shortfalls during the 2022/23 winter, included warnings about the impact on hospital admissions that the cold weather, increased fuel prices and cost of living might have, especially for the elderly.[35]
On 5 September 2023,Birmingham City Council, the largestlocal authority in Europe, issued aSection 114 notice declaring itself effectivelybankrupt.[36] In May 2024, the 12-MonthCPI, which is the official measure of inflation in consumer prices in the United Kingdom, reduced to the officialBank of England target of 2%.[37]
Inflation only remained at the target briefly and had returned to 3% by the end of 2024, with living costs remaining elevated.[38] While theft in general remained far lower than its peak in the early 1990s, shoplifting has continued to increase rapidly. A 20% increase in 2024 led to a record high for shoplifting, seen particularly among older demographics.[39][40]
April 2025 was nicknamed "awful April" by several media outlets, noting above-inflation increases in many household bills, chiefly water and energy.[41] These bill increases included an average 26.1% increase in water and sewage bills, the fastest increase since the late 1980s. Inflation reached 3.8% in July 2025, far lower than the 11.1% seen in October 2022 but still above the 2% target. It was expected to reach 4% in September, but remained at 3.8% for 3 consecutive months, before falling to 3.6% in October 2025.[42] Food inflation in particular was at 4.9% in July 2025, which is particularly problematic for low income households.[43]
Early government responses to rising inflation included a 6.6% rise in the minimum wage, which was announced in 2021, and came into effect in April 2022. The UK government intensified its efforts to respond to the cost-of-living crisis in May 2022, with a £5 billionwindfall tax on energy companies to help fund a £15 billion support package for the public. The package included every household getting a £400 discount on energy bills, which would be in addition to a £150 council tax refund the government had already ordered. For about 8 million of the UK's lowest-income households, a further £650 payment was announced. Additionally, pensioners or those with disability would qualify for extra payments, on top of the £550 that every household gets, and the £650 they would receive if they had a low income.[9][44][45][46]
In June 2022, business secretaryKwasi Kwarteng ordered an urgent review of the motor fuel market to complete by 7 July, to see if consumer prices were excessively high.[47] The measures were called insufficient by many people and organisations, including outgoing Prime MinisterBoris Johnson, with the Bank of England predicting that the UK would enter recession by 2023.[48][49]
Johnson's successorLiz Truss announced a package of subsidies for rising energy bills with an estimated potential cost of up to £150 billion, depending on future wholesale prices.[50] The main piece of this package was theEnergy Price Guarantee, which would mean that a UK household with "average energy usage" would pay no more than £2,500 a year on energy, although this was widely misinterpreted as Truss stated in media interviews that "nobody would pay more than £2,500". She later clarified this, while ruling out introducing a new windfall tax on the profits of energy producers and suppliers.[50][51] The subsidies were initially planned to last for two years for consumers and six months for businesses, but in October the new ChancellorJeremy Hunt said that the package would continue until April 2023 and that from this date support would be targeted at "the most vulnerable."[52]
After his appointment as prime minister in October 2022 following Truss's resignationamid an economic and credibility crisis caused bythe September 2022 mini-budget proposed by Truss and Kwarteng,Rishi Sunak continued the package of subsidies for rising energy bills. As chancellor, he provided some funding to help vulnerable people cope with the rising cost of living.[53]
In October 2022, the Scottish Government introducedan act to freeze rents and establish a moratorium on evictions in Scotland for both the private rented and social sectors.
Various campaigns, such asDon't Pay UK, were established to encourage the government to implement further assistance.
The campaignerJack Monroe warned that the crisis could be fatal for some of the children of low-income parents, and asked the government to increase benefits in line with inflation.[54] UK civil society continues to respond to the hardship caused by the cost-of-living crisis, such as by runningfoodbanks, though some foodbank managers report both extra demand but also lower levels of donations, as the crisis means some people who could previously donate can no longer afford to do so.[55][56] On 18 June 2022, thousands of workers marched to Parliament in London to demand further government action for the cost-of-living crisis.[57]
A campaign called "Enough is Enough" was organised by trade union leaders to lobby during the crisis. Its demands include a return to pre-April 2022 energy rates, a pay rise in real terms for public sector workers, a rise in the national minimum wage, a reversal of the National Insurance increase, and a £20 per week increase inUniversal Credit payments. Within a few weeks of its August 2022 launch, almost 450,000 people had joined the movement.[58] It gained some high-profile supporters, including theMayor of Greater ManchesterAndy Burnham and US SenatorBernie Sanders.[59]
In November 2023,The Trussell Trust calculated that a single adult in the UK in 2023 needs at least £29,500 a year to have an acceptable standard of living, up from £25,000 in 2022. Two partners with two children would need £50,000, compared to £44,500 in 2022. Twenty-nine per cent of the UK population—which works out to 19.2 million people—belong to households that bring in below a minimum figure.[60]
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TheGreen Party of England and Wales supports increasingUniversal Credit and implementing a home insulation scheme to reduce energy use and cut fuel bills as part of its stance on the cost-of-living crisis.[61] It also supports lowering the costs of public transport, providing 35 hours a week free child care from the age of nine months and a pay increase for public sector workers to match inflation.[62]
The cost-of-living crisis has been noted by the media,[63] as well as workers' unions, as one of the reasons for industrial action by staff in industries such as therailway strikes,[64][65] bus strikes[66][67] andaction bylegal aid lawyers.[68] In September 2022, theBBC soap operaDoctors began covering the topic in a long-running issue-led storyline featuringScarlett Kiernan (Kia Pegg) and her father struggling to survive.[69] In October 2022, the BBC unveiled its new brand,Tackling It Together, designed to help consumers navigate the cost-of-living crisis.[70][71]
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