The prime minister has claimed that the burden on hard-pressed households is "starting to ease".
In a BBC interview, Rishi Sunak said pressures from higher bills or mortgage rates were subsiding.
It comes as eight million people on means-tested benefits will receive their final cost-of-living instalment.
The £299 payment will go directly into bank accounts of those eligible before 22 February without the need to claim.
No further payments of this kind are scheduled and charities are urging the government to consider more support.
However, questions have been raised over whether such payments were the best way to help struggling households.
This payment of £299 is the last of three instalments that totalled £900 that will have been paid within a year.
Speaking to BBC Radio 5 Live on Tuesday, Prime Minister Rishi Sunak said that he was "sad" to hear about parents being so low on money they have been watering down baby formula for their infants.
"But my job is to make sure that we can ease those pressures," he said, pointing out that inflation - which measures the pace of prices rises - is now much lower than its peak of 11.1% in October 2022.
"That's why it was important that we prioritised bringing inflation down [...] that will have an impact on people because it will start to ease some of those pressures," he said. Although, a drop in global energy prices and the Bank of England's decision to increase interest rates have had the biggest part to play in cooling price rises.
Mr Sunak also said that households were "starting to see mortgage rates come down" and the government had given "meaningful" tax cuts.
Those on low incomes and receiving benefits such as universal credit are eligible for the cost-of-living payments, but they should be wary of scams in which fraudsters use the opportunity to try to access personal details.
They often purport to be from government bodies. Some are designed to capture financial information.
On legitimate payments, there will be a reference on a recipient's bank account of their National Insurance number, followed by DWP COL, or the reference HMRC COLS for those who are eligible through tax credits.
After this final instalment, no further cost-of-living payments are currently scheduled, with some pressure on Chancellor Jeremy Hunt to announce more support in next month's Budget.
"Our data shows that the cost-of-living payments do offer some respite to people, but this is short-lived. Historically high energy bills, unaffordable housing and other spiralling costs are keeping people in crisis," said Morgan Wild, of Citizens Advice.
"The government has responded with temporary support but we need more than quick fixes. Long-term commitments are needed to raise people's incomes and standard of living."
The prime minister also told 5 Live that the government had provided "considerable support for the most vulnerable in society... totalling about £100bn".
He added: "Taken in the round, there's lots of support for the people who need it."
David, 77, who lives in Nottingham, said there was not much room for manoeuvre with his finances.
"I'm having to budget carefully for food and clothes. I have to make do with the minimum," he said.
"I often wonder how I am going to manage in the long term,"
The government has pointed to a 6.7% rise in benefits and an 8.5% rise in the state pension, as well as an increase in the financial support provided to those on benefits who rent privately, which all come into effect in April.
On Tuesday, Sarah Olney, a Liberal Democrat MP, said: "If the prime minister thinks people are no longer struggling with the cost of living he must be living on another planet.
"The government could be doing so much more, like reversing their tax cuts for big banks to help those struggling to pay their mortgage keep a roof over their head."
A committee of MPs also recently questioned whether the cost-of-living payments were sufficient to help those in financial difficulty owing to high bills and prices.
In November, a report by the Work and Pensions Committee said the money only provided a temporary reprieve for some, and may have been better used for increasing benefits instead.
This is not the only cost-of-living payment. More than six million people with disabilities received £150 during last summer. During the winter, over eight million pensioners received an extra payment of up to £300, primarily to help with energy bills.
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Am I eligible for the money?
The money will be added automatically into the account which is used to receive benefit payments
The reference will be DWP COL, along with the claimant's National Insurance number
To qualify for a payment, you must receive one of universal credit, income-based jobseeker's allowance, income-related employment and support allowance, income support, working tax credit, child tax credit, or pension credit
You will need to have been entitled to a payment for one of these benefits between 13 November and 12 December, or payment for an assessment period ending between these dates
Low-income pensioners who are eligible for, but not claiming pension credit, can still qualify for the cost-of-living payment if they make a successful backdated pension credit application
Those who qualify solely through tax credits will receive their cost-of-living payment with the reference HMRC COLS