Are cost-of-living pressures finally starting to ease?

Inflation fell to its lowest level in almost a year in January - good news for households feeling the pressure of rising living costs.

So naturally, many people will be wondering if the rate of price increases may have peaked and if we’re finally starting to turn a corner.

Well, yes and no.

The Office for Budget Responsibility (OBR) believes inflation will return to target in the second half of this year - earlier than it forecast last autumn.

But it’s still a mixed picture for the wider economy.

In today’s spring statement, chancellor Rachel Reeves acknowledged the world has “become more uncertain” in recent days, following the US and Israel’s attack on Iran.

And the OBR has lowered its growth forecasts for the year from 1.4% to 1.1%.

Yet growth has been revised up for the following years, with the OBR predicting increases of 1.6% in 2027 and 2028 and 1.5% in 2029 and 2030.

People will be 'over £1,000 a year' better off in 2029, says chancellor

Economic growth figures can often feel remote and distant when we’re thinking about our own lives and the money in our pockets.

That’s why the chancellor also pointed to GDP per capita - the average economic output per person - which is set to grow by 5.6% during the current parliament.

Reeves believes that after accounting for inflation, people will be “over £1,000 a year better off” by the next election.

Speaking in parliament, Reeves said when people come to cast their vote, they’ll be asking if their family is better off.

"I am determined that the answer will be yes,” she stated.

What about unemployment?

Unemployment stood at 5.2% in the final quarter of 2025 and is tipped to peak at 5.3% this year.

But it’s then set to gradually fall to 4.1% by 2030.

The chancellor pointed out that young people are particularly hard hit by unemployment right now.

However, she said the government will take steps to help them into work, such as reforming apprenticeships.

Middle East crisis raises questions

Rachel Reeves began her speech by addressing the uncertainty caused by the Middle East conflict and said the government will “secure the economy through shocks".

But we should stress that the OBR figures don’t take possible consequences of the unfolding crisis into account, such as energy prices going up.

The OBR said the conflict “could have very significant impacts on the global and UK economies”, and that its forecast “lies in the middle of a wide range of possible outcomes”.

In other words, it’s hard to accurately predict what effect the situation in the Middle East will have both on the wider economy and people’s personal finances.

Rest assured that we’ll be keeping a close eye on what’s going on and here to let you know what it will mean for you and your money.

We’re also here to give you practical support, such as helping you:

• find out what benefits you can claim
• create a household budget
• deal with your debts