What is the cost of living crisis?
The cost of living crisis is the fall in real incomes many UK households faced from late 2021. Prices rose faster than wages and benefits. Energy, food and housing costs jumped. CPI inflation peaked at 11.1% in October 2022, the highest for over 40 years.
The crisis began as economies reopened after Covid and supply chains struggled. Russia's full-scale invasion of Ukraine in 2022 then sent gas and food prices soaring. Household energy bills roughly doubled, and the government paid towards bills to limit the rise. The Bank of England raised interest rates sharply, which pushed up mortgage and rent costs. Inflation fell back from 2023, but prices stayed far higher than before. Falling inflation does not mean prices go back down. In August 2026 CPI inflation was 3.1%, still above the 2% target. Poorer households were hit hardest because they spend more of their income on energy and food. Many turned to food banks or cut back on heating. Rents also rose quickly in many areas, adding to the strain on younger households.
The left wants windfall taxes on energy firms, higher benefits, rent controls and price caps to protect poorer households.
The right favours tax cuts, more energy production at home and tight control of spending to bring inflation down.
Britain is split. Now you decide.
Population Decides' energy shock events test whether you cap bills, support households or protect the public finances.
Play Population Decides freeCommon questions
Is the cost of living crisis over?
Inflation is much lower than its 2022 peak, but prices remain much higher than before. Many households still feel squeezed.
What are real wages?
Real wages are pay after allowing for inflation. They fall when prices rise faster than pay.