Newly released figures, presented in five charts, show how sharply the cost of living has risen across the United Kingdom, adding to the financial strain on households nationwide. The data comes as Prime Minister Andy Burnham begins a month-long “cost of living” listening tour to gather firsthand accounts of the public’s money worries. The mood was captured by one Reddit user who joked that housing, energy, and food are all too expensive and suggested Burnham could save on costly fuel by skipping the trip.
Annual inflation in the UK stood at 2.8 percent in June, down slightly from 3 percent in May. That means prices are still climbing, but at a slower pace; an item that cost 100 pounds ($135) a year earlier now costs 102.80 pounds ($138.65). The Bank of England had previously forecast that inflation would ease from 3.4 percent in 2025 to 2.3 percent in 2026, but those expectations were upended after the United States and Israel attacked Iran in late February. Inflation stood at 3.4 percent again in March, driven largely by higher fuel and heating costs, and the Bank now expects further upward pressure in the second half of the year as the fallout from the conflict pushes up energy prices and household bills.
Fuel costs have been a major driver. The closure of the Strait of Hormuz, a route for about one-fifth of the world’s oil and liquefied natural gas supplies, has pushed up the price of petrol, transport, food, and other goods. Petrol prices have hit a three-and-a-half-year high. According to data from the RAC Foundation, the price of petrol and diesel rose by 22 percent and 27 percent, respectively, between February 25 and August 11. The average price of a litre of petrol increased from 1.32 pounds ($1.78) to 1.61 pounds ($2.17), while diesel rose from 1.42 pounds ($1.92) to 1.81 pounds ($2.44) per litre.
Not every household feels the squeeze equally. The average UK household spends about 677 pounds ($914) a week on goods and services, with the largest costs being housing, fuel and power, transport, food, and recreation. But the Office for National Statistics found that the poorest 20 percent of households spend an average of 407 pounds ($549) a week, compared with 1,084 pounds ($1,462) for the richest 20 percent. Proportionally, poorer households feel price rises more keenly, as they spend a larger share of their income on rent, energy, food, and transport and have far less cushion to absorb increases. The Joseph Rowntree Foundation, an anti-poverty charity, says 7.4 million low-income families cannot afford essential items this year, the highest number since its cost-of-living tracker began in 2021.
Britain’s 2.8 percent inflation rate in June places it in the middle of the Group of Seven advanced economies. The US has the highest rate at 3.5 percent, followed by Italy at 3 percent, Canada at 2.8 percent, the UK at 2.8 percent, Germany at 2.3 percent, France at 1.8 percent, and Japan at 1.7 percent. For the UK, inflation is being driven primarily by energy costs linked to the Middle East conflict, services inflation of 3.6 percent in June from higher restaurant and hotel prices, and slowing wage growth.
Food price inflation has slowed, with food and non-alcoholic drink prices 1.7 percent higher in June than a year earlier, down from 2.2 percent in May. But the Bank of England warns that food inflation could rise to nearly 3.5 percent by December as higher energy costs affect production and transport, and supermarkets expect food inflation of 4 to 5 percent by the end of the year. Meanwhile, weekly regular real earnings, adjusted for inflation, have dipped from about 0.4 percent at the start of the year to 0.1 percent after the Iran war began, making it harder for households to keep up with rising prices.