Stuart Trow, Columnist

Britain’s Cost-of-Living Crisis Is as Bad as It Sounds

The country’s poorest households have been struggling for a long time. But increases in inflation, interest rates and taxes are about to make things worse.

February 9, 2022 at 6:00 AM UTC

By Stuart Trow

Stuart Trow is co-host of “Money, Money, Money” on Switch Radio and author of “The Bluffer’s Guide to Economics.” Previously, he was a strategist at the European Bank for Reconstruction and Development.

A crisis.
Photographer: Christopher Furlong/Getty Images Europe

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We talk about the U.K.’s cost of living crisis as if it’s a new thing. To some extent, this is understandable. The U.K. Consumer Price Index rose by 5.4% in 2021, the fastest pace since March 1992. The older, broader Retail Price Index (RPI), meanwhile, hit 7.5% in December — easily the fastest pace this century.

However, for most Brits, real wages were falling long before inflation accelerated beyond the Bank of England’s 2% target. Once they have been adjusted for RPI, median wages are lower today than they were at the time of the 2008 global financial crisis. And lower earners have been suffering for far longer. At the 25th percentile, wages have failed to match RPI every year bar one since 1987.