The cost of living crisis that dominated British politics for two years has receded from the front pages. Inflation is back to near-target. Real wages are rising. The emergency is over. But for millions of households, the damage is not undone — it is simply no longer accelerating.
The Uneven Recovery
Households in the top income quintile have, on average, recovered the real purchasing power lost during the 2021-23 period. Those in the bottom quintile have not. The assets held by wealthier households — primarily property and financial investments — have rebounded. The wage income that lower-income households depend on has grown in nominal terms but not yet restored the losses from peak inflation.
Food Prices
Grocery prices are 26% higher than they were in January 2021. The rate of increase has slowed dramatically, but the level is permanent. Families that adjusted their diets and shopping patterns to cope — choosing own-brand products, reducing meat consumption, shopping at discounters — have not reversed those changes.
The food banks that expanded so dramatically during the crisis are still at elevated utilisation levels.
Energy
The energy price cap has fallen from its peaks. But the structural changes in the energy market — higher European gas prices, tighter interconnection margins — mean that UK energy is unlikely to return to pre-2021 prices.
The households most exposed to energy costs — renters in poorly insulated properties — remain vulnerable to any future price spikes.
