UK households face battle to regain former living standards even if inflation eases

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Inflation remains a problem for every household, despite recent falls that have more than halved the consumer prices index since a peak in 2022.

Article originally published by The Guardian. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

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14 Feb 2024

The latest figures for January show gas and electricity bills were pushed higher by Great Britain’s regulator, Ofgem, lifting the prices cap by 5%, while restaurants and hotel charges jumped 7% year on year.

These price increases were the main drivers preventing the CPI from falling in January. It remained stuck at 4%, albeit slightly lower than City economists had expected.

Good news came from the food industry, where inflation fell from December to January, but the annual rate remains high at 7% and food and non-alcoholic beverage prices are about 25% higher than they were two years ago, the Office for National Statistics said.

Worse is the price of electricity, gas, and other fuels. Inflation for this category has fallen by 18% since its peak in January 2023. However, prices last month were 89% higher than they were in January 2021.

These are dramatic increases in the cost of living. So it is no