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 burden of the cost of living crisis is being felt in every corner of the UK. Nationally, the picture is clear, but much less is known about how the rising cost of living is playing out geographically and what this means for people living in different places across the country.
This report sets out what the cost of living crisis is, its drivers, and how the squeeze on disposable incomes is likely to be felt across the UK’s cities and largest towns.
It also launches a new cost of living tracker, tracking city-by-city inflation and wage figures to monitor where inflation is hitting hardest, how prices and wages are rising across cities and large towns, and the impact of mounting prices on money in worker’s pockets.
Using a city-level inflation estimate, developed for the first time by Centre for Cities and analysis on wage growth, the report finds that:
Inflation is higher in the UK’s poorest cities. Households in Burnley, Blackburn and Blackpool will likely see higher inflation compared to those in southern cities like London, Reading and Cambridge.
The report finds that energy and petrol consumption account for most of the differences between places, influenced by:
When prices grow faster than nominal wages, consumer spending power is squeezed.
In real terms, wage growth has failed to keep pace with inflation in all 63 cities over the past year, but the cities that have low nominal wage growth and high inflation rates experienced a particularly severe downturn. These places are typically located in the North.
The Government’s support package varies across the country and while welcome, is not based on actual energy needs and fails to consider the fact that energy demand is influenced by the energy efficiency of housing stock.
This means that unless additional targeted support is provided, for many places, particularly those in the North, energy bills are likely to jump even higher when the price cap is lifted in October.
In the short term, the Government should support people’s immediate spending needs by:
In the medium to long term, Government should look to implement policy to help mitigate the impact of inflationary shocks in the future. These include:
Explore more of Centre for Cities' debut research and analysis into the UK's cost of living crisis and how it is playing out across the UK.
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 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.