The geography of the cost of living crisis persists, with cities and large towns in the North most impacted by soaring costs.
The cost of living crisis is worsening. Nationally, inflation has gone up from 9.4 per cent in June to 10.1 per cent in July, hitting double digit figures for the first time in forty years. While the price of petrol and energy continues to rise, this new increase was primarily driven by soaring food prices.
To understand how this squeeze plays out between places, Centre for Cities today updated its Cost of Living Tracker which includes city-level inflation data, and newly added data on essential spending. Here’s what it shows.
No corner of the country is spared by mounting costs, and inflation is going up in all cities and large towns. But some places, mostly in the poorest parts of the country, are hit particularly hard.
The geography of the cost of living crisis persists, echoing last month’s findings: many of the hardest-hit places are cities and large towns in the North (Figure 1). Burnley, Blackpool and Blackburn are still the worst affected, with inflation above 11 per cent in all three places. This is more than 2 percentage points higher than in cities like London, Cambridge and Reading, where inflation is below 10 per cent (Table 1).
Source: ONS; Beauclair; DHLUC, HMRC (PAYE), Centre for Cities’ calculations.
| City | Highest inflation | City | Lowest inflation |
| Burnley | 11.7% | London | 9.1% |
| Blackpool | 11.2% | Cambridge | 9.2% |
| Blackburn | 11.2% | Reading | 9.7% |
Source: ONS; Beauclair; EPC Certificate, HMRC (PAYE), Centre for Cities’ calculations.
Again, these spatial disparities are explained by their consumption and spending patterns. The poorest households tend to spend more on essentials, like energy and food, which makes them more vulnerable to soaring prices. In Burnley, for instance groceries account for 30 per cent of all spending, against 23 per cent in London.
The cost of living tracker now includes credit and debit card data which shows, unsurprisingly, that spending on essential goods like energy and fuel had spiked given the pressure on costs.
On average across all cities and large towns, people spend an extra 25 per cent on petrol compared to the same period a year ago (+£22.90). The impact of rising prices is even more visible on energy, with people spending 37 per cent more on utilities (+£41).
Higher petrol and energy costs have left people with little choice but cutting on other essentials. In a large majority of cities, grocery spending is in absolute terms slightly lower now than it was a year ago (-3 per cent on average). Given how prices have increased in the same period, this is a sign that people have consumed either less food or lower quality items. This echoes a recent ONS survey showing that nearly half of adults declared cutting back on food shopping and shifting to cheaper products.
Figure 3 uses data from the Cost of Living Tracker to show how these changes in spending and consumption play out, using the example of Barnsley - with a sharp increase in petrol and energy spending, and a drop in grocery spending.
Source: Beauclair. Check the cost of living tracker for data on all cities and large towns.
The multi-billion package announced by the Government back in May is increasingly inadequate, particularly given the outlook has worsened since it was introduced. New forecasts from Cornwall Insights have since suggested that the energy price cap could reach £3,582 a year for a typical household from October, and £4,266 a year from January 2023- much higher than previous estimates. Given this, it has been estimated that a further £12 billion would be needed now to achieve the same level of protection as announced in May.
In the short term, the priority for the next Prime Minister should be to offer further targeted support, including aligning benefits with inflation now (rather than next year), reintroducing the £20 uplift to the Universal Credit, and helping the most deprived households who currently face skyrocketing energy bills with a one-off payment support. But it’s equally important the next Government does not lose sight of the long-term challenge: levelling up the economy and increasing the level of prosperity in all parts of the country, to ensure places are more resilient to times of financial hardship.
The UK is in the grip of a cost of living crisis, and there is a clear North-South divide in how it is playing out across the country. Explore the latest data for your city or large town.
This report sets out what the cost of living crisis is, what is driving it, and how the squeeze on disposable incomes is likely to be felt across the UK’s cities and largest towns.
The cost of living crisis is deepening inequalities across the country with cities outside the South suffering higher rates of inflation and tighter squeezes on household finances
Andrew Carter is joined by Valentine Quinio and Guilherme Rodrigues to unpack the findings of their latest report looking at the UK’s cost of living crisis.
There is a clear North-South divide in the current cost of living crisis. This is partially explained by lower income levels outside the South of England but there are also local factors driving this.
The cities more likely to receive payments to deal with the cost of living crisis tend to be poorer and have higher energy needs
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