Typical household loses £2,900 annually as cost-of-living crisis deepens
The Resolution Foundation reports that a typical working-age family is £2,900 poorer this year because of sustained inflation, with the poorest households hit hardest.
A recent report from the Resolution Foundation shows that five years of relentless cost-of-living pressures have reduced real incomes by nearly 8%, making a typical working-age household £2,900 poorer than it would have been if inflation had stayed at 2%. The analysis attributes the surge to three overlapping crises: the aftermath of Covid, the war in Ukraine, and ongoing conflict in the Middle East, which pushed inflation to a peak of 11.1% and sent energy costs to the centre of a household price shock.
Food prices also spiked, reaching almost 20% inflation in March 2023, and the impact has been uneven, with the poorest tenth of families experiencing a one-sixth larger rise in non-housing expenses than the richest tenth. James Smith of the Resolution Foundation warns that government finances limit new support, urging any aid to focus on poorer families’ energy bills. Alex Beer of the Nuffield Foundation and TUC General Secretary Paul Nowak echo the call for targeted relief, linking the crisis to geopolitical tensions involving Donald Trump and Vladimir Putin.
Why it matters
It shows how prolonged inflation erodes household purchasing power, especially for low-income families, and highlights the need for targeted policy responses.
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