Working families £2,900 worse off in UK cost-of-living crisis over past 5 years

Working families £2,900 worse off in UK cost-of-living crisis over past 5 years Families have faced repeated blows since inflation began climbing above the Bank of England's 2% target in 2021. Share Article Share Article Facebook X LinkedIn Reddit Bluesky Email Copy Link Link copied Bookmark Add us as preferred source Comments By Kris Boratyn , Audience Writer 08:21, Thu, Oct 8, 2026 Updated: 08:24, Thu, Oct 8, 2026 Andy Burnham urges new Cabinet to focus on cost of living Working families have suffered a huge financial squeeze after five years of soaring prices , with new analysis suggesting typical household incomes are around £2,900 lower than they otherwise would have been. Analysis from the Resolution Foundation found typical non-pensioner household incomes would have been £2,900 higher in 2026-27 without the cost-of-living crisis . Families have faced repeated blows since inflation began climbing above the Bank of England's 2% target in 2021. Prices are now nearly 30% higher than five years ago, with the think-tank calculating Britain has experienced the equivalent of 13 years of "normal" inflation in just five years. The squeeze began as the world emerged from the Covid pandemic, when disrupted supply chains struggled to cope with renewed demand. Article continues below ADVERTISEMENT Russia's full-scale invasion of Ukraine then sent energy and other costs soaring, helping push UK inflation to a peak of 11.1% in 2022. Households are now being hit by another energy shock linked to the war with Iran, which has pushed up oil and gas prices and added more pressure to family budgets. The impact has been particularly painful for poorer families because essentials such as food and energy make up a greater share of their spending. Households cut their gas and electricity consumption by 13% across 2022 and 2023, according to the Resolution Foundation, with the biggest reductions recorded in the poorest neighbourhoods. Despite using less energy, families were still spending 57% more on it in real terms at the height of the crisis than before the pandemic. Financial problems have also continued long after the original inflation surge. Article continues below ADVERTISEMENT Older state pensioners handed £415.44 per week with AP change ‘Work 40 hours a week and get f*** all’ - anger at new Labour ‘plan’ to cut energy bills Prices are now nearly 30% higher than five years ago, (Image: Getty) Around 18% of households in the poorer half of the population were behind on utility and household bills in March this year, compared with one in ten in September 2020. Article continues below ADVERTISEMENT Families now face another difficult winter as pressure on household budgets continues. The energy price cap rose 4% in October, while Cornwall Insight has forecast another 16% increase in January. Mortgage borrowers are also feeling the pressure, with the average five-year fixed mortgage rate reaching 6% this week, its highest level for three years. But the Resolution Foundation warned the state of the public finances means ministers have less room to provide the kind of widespread financial support offered during the previous energy crisis. James Smith, chief economist at the Resolution Foundation, said: "Unfortunately, help is needed just when the public finances leave less room than ever to provide it. "The Government can't borrow its way out of this, and repeating the expensive blanket support of 2022 isn't an option. Any new help must be squarely targeted at the poorer families facing the greatest hardship - starting with their energy bills." Get personal finance news, money saving tips and advice plus selcted offers and competitions I would like to receive emails from the Daily Express featuring our latest products, services, offers, and promotions from across the Reach Plc family . Subscribe Invalid email You agree you are 18 or over. We use your sign-up to provide content in ways you've consented to and to improve our understanding of you. This may include adverts from us and third parties based on our knowledge of you. You can unsubscribe at any time. More Info . Inflation Cost of living Energy bills Coronavirus Russia-Ukraine war Iran-Israel conflict Share Article Share Article Facebook X LinkedIn Reddit Bluesky Email Copy Link Link copied Bookmark Add us as preferred source Comments