The impact of the cost-of-living crisis on households laid bare

After years of what seems like one global crisis after another, people’s finances are in a worse position than they would have been otherwise.

That’s the view of the Resolution Foundation, which said that in the last five years, households have been buffeted by supply shocks following the Covid-19 pandemic, Russia’s invasion of Ukraine and the conflict in the Middle East.

And that’s taken its toll, with research suggesting the UK has seen 13 years’ worth of “normal” inflation in five and that prices today are nearly 30% higher than in 2021.

That means that typical working age households are £2,900 - almost 8% - worse off this year than they would have been had inflation stayed at normal levels.

Energy bills put pressure on households

The Resolution Foundation singles out energy as the “epicentre of this price shock”, with high bills forcing households to make tough choices to make ends meet.

For example, between 2021-22 and 2022-23, the number of households saying they were unable to keep their home warm enough rose by 1.7m.

That’s why it’s so important to see what help is out there if you’re struggling with your energy bills.

The government is reportedly considering extra support for households on lower incomes, as energy bills are expected to rise sharply in January.

But if you can’t afford to wait for what the government may or may not announce, speak to your supplier straight away, and see what steps you can take to use less energy.

Low-income households bearing the brunt of soaring living costs

Unsurprisingly, it’s those on the lowest incomes who are taking the biggest hit from rising prices.

For instance, 950,000 of those unable to keep warm were in the poorest 40% of the population.

And by March 2026, nearly one in five (18%) of households in the poorest half of the country had fallen behind on a priority bill.

That’s up from one in ten (10%) in September 2020.

Since 2018, the amount owed to energy suppliers has more than tripled, reaching around £5bn.

Similarly, council tax arrears in England have more than doubled since 2012-13 to £7.5bn.

What can I do if I’m struggling with essential costs

If you’re finding it hard to keep up with vital bills and other day-to-day costs, there are practical steps you can take.

Create a household budget

Work out exactly how much money you’ve got coming in each month and where it’s going, so you can prioritise essential bills and see where savings can be made.

Check our guide to creating a budget to find out more.

See what benefits you can claim

Use our benefits calculator or give us a call to find out if you’re eligible for any financial support.

It might be more than you realise.

Ask for help with your debts

If you’re feeling weighed down by debt, contact us for confidential, practical and impartial debt advice.