The Cost of Living Crisis: How Britain’s Households Are Really Doing

Real wages are finally rising in the UK — a development that has taken nearly three years to materialise after the inflation shock of 2022-23. But the recovery is deeply uneven.

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The Recovery in Numbers

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Median real wages are now approximately 2% above their pre-pandemic level. But that average disguises enormous variation.

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Who Is Still Struggling

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Renters, particularly in London and the South East, face an affordability crisis that wage growth has not resolved. Energy costs remain elevated. Food inflation, while moderating, has permanently raised the grocery bill.

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The Wealth Divide

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Homeowners with fixed-rate mortgages and financial assets have navigated the crisis relatively well. Renters on variable incomes have been hit hardest.

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What Recovery Looks Like

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Broad-based economic recovery requires sustained real wage growth, falling inflation, lower mortgage rates and a housing market that more people can access.

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