The cost of living
After two years of the cost-of-living crisis, many people’s finances have suffered. Household bills and costs are much higher than they were two years ago, and millions of people are having to make difficult choices about their finances.
Whilst we may not be able to predict or control what's happening in the world, we can help you to understand what these changes mean for you and your finances.
Find out more about how you can manage your money when bills are high and where you can get help.
Help with the cost of living
We’ve created The Cost of Living Room to give people a comfortable place to have an uncomfortable conversation.
We hear people’s first-hand stories as they sit down with Royal London's consumer finance specialist, Sarah Pennells, and pensions expert, Clare Moffat, to talk about the hidden costs of the crisis and get helpful guidance on where to look for further support.
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Dealing with credit in a crisis
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The hidden cost on your wellbeing
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Reaching out when you reach your limit
Answering your questions
Sarah answers some of your most asked questions about the cost-of-living crisis.
What is the cost-of-living crisis?
During the cost-of-living crisis, the cost of everyday essentials, such as gas and electricity, food and fuel, were rising faster than average incomes. Even though costs are rising more slowly, and in some cases, falling, people are paying higher costs than they were before the cost-of-living crisis started in early 2022.
What caused the cost-of-living crisis?
The cost-of-living crisis resulted from rising prices across energy, food, fuel and other costs. Rising energy costs played a big role in the cost-of-living crisis, and energy prices started to rise after life got back to normal after Covid, and rose sharply after the start of the war in Ukraine.
Interest rates started rising at the end of 2021, and continued increasing for over 18 months. Rising interest rates resulted in higher mortgage costs and for those on a variable rate mortgage and for people whose fixed rate deal had run out. Higher interest rates also feed through into higher rental costs for many tenants.
What is inflation and why does it impact cost of living?
Inflation is a measure of how quickly prices are rising over time. The higher the inflation rate, the more prices are rising by. The inflation rate for a particular month shows how much prices have risen by compared to the same time last year.
In order to calculate the inflation rate, the Office for National Statistics, or ONS, tracks the price of a so-called ‘basket of goods’. There are over 700 items in the ‘basket’ and the items in it are changed from time to time to reflect changes in our shopping habits.
The most commonly used inflation index is called the Consumer Price Index or CPI.
What cost-of-living help can I get?
The government is no longer running a programme of extra help for the cost of living, as it had done in previous years. However, there may state benefits or grants that could help you with the cost of living. In fact, it’s estimated that as much as £23 billion is going unclaimed in state benefits.
There are also schemes that companies run that could reduce your costs, such as cheaper tariffs for broadband and water (called social tariffs). You can find out about the help that’s available with the cost of living in our guide called Where to get help with the cost of living.
I’m a pensioner – how does the cost-of-living crisis impact me?
If you’re a pensioner, you’re likely to be particularly affected by higher energy bills. The government is providing help with energy costs through the Winter Fuel Payment. However, you may also be entitled to an extra £150 off your electricity bill through the Warm Home Discount scheme, if you’re on Pension Credit (the guarantee element).