Average UK household has lost £5,455 to inflation over past two years, research finds
The average UK household has lost £5,455 to inflation over the past two years, according to new research.
Interactive Investor found that UK purchasing power has fallen by a combined £153 billion over the past two years, or £5,455 per household, because of price rises between March 2021 and March 2023.
Energy price rises have had the biggest impact, hitting each household by an average of £1,885, while food price rises have cost £1,147.
“This once in a generation type cost-of-living crisis has robbed us all of purchasing power to the tune of £153 billion over the past two years, placing a huge amount of strain on household budgets,” Myron Jobson, senior personal finance analyst at Interactive Investor, says. “There has been no escape from rampant inflation because the majority of it is reflected directly in our energy and grocery bills which we are resigned to paying as they form part of essential expenditure for many.”
Inflation has remained stubbornly high for much longer than experts had initially predicted, coming in at 10.1% in March thanks to soaring food costs.
The ONS will publish April’s inflation figures on Wednesday. With last April’s increase in household energy bills set to fall out of the equation, economists expect a significant fall in the rate of price rises.
However, the predicted rate of 8.3% would still be well above the 2% mark that the Bank of England sees as ideal.
Alice Guy, head of pensions and savings at Interactive Investor, said: “Inflation is a cruel taskmaster and has robbed many families of the ability to save for and build a brighter future for their families. Families have needed to find an extra £5,455 in total over the past two year just to keep their heads above water. Many people have been forced to raid their life savings or relying on credit to tide them over.
“There is glimmer of hope on the horizon is that there are signs inflation may be beginning to ease. It’s encouraging that supermarkets are beginning to talk about cutting prices on some product lines. Wholesale energy prices are also beginning to fall, and we should see some of that saving passed on in the months to come.
“If you are struggling to make ends meet then don’t be afraid to reach out and ask for help. Banks and lenders have a duty to help their support their customers and debt charities can help review your budget and may be able to help you cut your debt costs by speaking to your lenders.”