Inflation may have declined for the second month in a row, but the cost of living crisis is far from over and the latest data continues to show a North-South divide.
Over the last 18 months, inflation rose by 13.6%, and it’s unlikely that average pay has been able to keep up with this pace. This highlights the importance of supporting the lowest income households and delivering on the levelling up agenda.
Two key factors driving the cost of living crisis across cities and large towns are: energy consumption and petrol consumption.
Domestic energy costs are linked to the nature and quality of housing stock. Energy inefficient dwellings (i.e. those that fall below EPC band C) tend to be more expensive to run and so are forcing a tighter squeeze on household finances.
Vehicle usage, and by extent spending on petrol, also play into the equation. Households that are more reliant on cars to travel are more vulnerable to soaring fuel prices.
While the national picture is clear, a lot less is known about how the cost of living is playing out in cities and large towns across the UK. Centre for Cities research shows there is a clear geography to the crisis, which is deepening inequalities across Britain and worsening the North-South divide. Cities outside the South are suffering higher rates of inflation and tighter squeezes on household finances.
Centre for Cities’ cost of living tracker maps city-by-city inflation and wage figures to visualise where inflation is hitting hardest and how prices and wages are rising across cities and large towns. Additionally, our energy prices tool shows how average energy bills differ across the country and the respective impact of the Energy Price Guarantee (EPG).
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Our research has shown that many of the cities and towns facing higher inflation rates are in the North, Midlands, and Wales. As of February 2023, Burnley has the highest inflation rate at 11.8%. This is followed by Glasgow and Blackpool both at 11.4%.
At the other end of the spectrum, cities and large towns in the South, particularly in the Greater South East, have been relatively sheltered from rising costs. As of February 2023, places with the lowest inflation include London (9.3%), Cambridge (9.3%) and Reading (9.4%).
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In early September 2022, the Truss Government announced the Energy Price Guarantee (EPG), outlining that typical household energy prices will be capped at £2,500 a year for the next two years.
While this will partially shelter households from soaring energy costs, it will have an uneven impact across the country because households outside the Greater South East are more likely to have energy bills above £2,500 due to differences in energy efficiency.
This follows on from the £15bn support package put forward by the Johnson Government at the end of May 2022.
Given the crisis has worsened, this package is increasingly inadequate, and, as called for by Centre for Cities, should offer more targeted support toward the people and places that need it most.
To tackle the cost of living crisis in the short term, the Government should support people’s immediate spending needs by:
There are also a number of medium to long term policy interventions that would help to mitigate inflationary shocks from happening in the future, such as accelerating the retrofit agenda and encouraging general economic growth to counter soaring costs.
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Prices of goods and services may be stabilising, but consumer spending power is still far from where it was at the beginning of the crisis.
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.
The unexpected rise in inflation squeezes northern towns and cities hardest.
What does the future look like for the net zero agenda under the Conservative government?
The recently announced package to tackle the energy crisis is welcome but like previous measures, it does not address the existing North-South divide in energy needs.
The geography of the cost of living crisis persists, with cities and large towns in the North most impacted by soaring costs.
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.
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