Households left £2,900 worse off due to above-average inflation

Research published by the Resolution Foundation and funded by the Nuffield Foundation shows that crises in the last five years have delivered 13 years' worth of 'normal' inflation which has led to incomes of typical working age households being £2,900 less than would be expected under the norm.

12 Oct 2026

Research published by the Resolution Foundation and funded by the Nuffield Foundation shows that crises in the last five years have delivered 13 years' worth of 'normal' inflation which has led to incomes of typical working age households being £2,900 less than would be expected under the norm.

Prices were nearly 30% higher in August 2026 than July 2021 with steepest inflation for spending on essentials. This has resulted in a disproportionate impact on poorer households with the rise in non-housing costs since before the pandemic being around one-sixth greater for the poorest tenth of households than the richest.

High energy costs have been one of the key drivers and inflation has resulted in many households cutting back on heating and energy use. In some cases, families are falling behind on their priority bills such as energy, water, Council Tax and rent.

Alex Beer, Assistant Director of Strategy at the Nuffield Foundation said:

'Five years of unusually high inflation have had a substantial impact on household finances, with lower-income families facing the greatest pressure. By showing how rising energy and food prices have reduced living standards and made it harder for people to pay essential bills, the report provides timely and valuable evidence on the consequences of an extended costs of living crisis.'

Internet link: Resolution Foundation