UK households £2,900 worse off than expected after five years of soaring prices

UK households are around £2,900 a year worse off than they might otherwise have been after five years of rising prices, according to new research published on 8 October 2026.

But the figure does not mean every family has lost £2,900. It shows how far household incomes have fallen behind where they were expected to be before the cost-of-living crisis.

The Resolution Foundation’s new report, Counting the cost, looks at how higher prices since 2021 have affected people’s finances and living standards.

It found that, despite inflation falling from its peak, many households are still struggling with higher bills and money owed on essential costs.

What does the £2,900 figure actually mean?

The Resolution Foundation estimates that the income of a typical non-pensioner household will be around £2,900 a year lower in 2026–27 than it might have been without the cost-of-living crisis.

It reached this figure by comparing what happened to household incomes with what earlier forecasts suggested would happen.

Between 2020–21 and 2026–27:

• The typical non-pensioner household’s income is estimated to have fallen by around £450 after taking rising prices into account
• Before the crisis, forecasts suggested it would have increased by around £2,500
• The difference between these two figures is approximately £2,900

These are estimates for 2026–27, rather than confirmed figures for a completed financial year.

This is based on the median household, which means the one in the middle when households are ranked by income, rather than the mathematical average.

The calculation is for non-pensioner households, rather than every UK household.

Put simply, the £2,900 is the estimated gap in annual household income in 2026–27. It is not the total amount lost over the previous five years.

It works out at roughly £242 a month, although that does not mean anyone has an extra £242 monthly bill.

Does this mean every household has lost £2,900?

No. The figure is an estimate of the gap between actual household income and what might have happened without the crisis.

It does not mean:

• Every household has £2,900 less in its bank account.
• Families have each spent exactly £2,900 extra over five years.
• Household incomes have actually fallen by £2,900 since 2021.
• Everyone has been affected equally.
• The government is announcing a £2,900 payment.

Some households have been hit much harder than others, particularly those on lower incomes who already spend a large share of their money on essentials.

The figure is also a comparison with an earlier forecast, not a guarantee of what household incomes would have been.

Prices have risen by nearly 30% in five years

The report shows just how much everyday costs have increased.

Inflation first rose above the Bank of England’s 2% target in May 2021, before reaching 11.1% in 2022.

According to the Resolution Foundation, prices are now nearly 30% higher than they were in July 2021.

That means the UK has experienced the equivalent of around 13 years of normal inflation in just five years.

Although inflation has fallen significantly since 2022, prices have not returned to their old levels.

The latest Office for National Statistics figures show inflation was 3.1% in August 2026.

That means prices were still rising overall, just more slowly than during the worst of the crisis.

This helps explain why families can hear that inflation is falling while still finding their weekly shopping, energy and other household costs difficult to afford.

Energy bills remain a major pressure

Energy has been one of the biggest problems for household budgets.

The Resolution Foundation found that households reduced their gas and electricity use by 13% across 2022 and 2023.

Despite using less energy, families were still spending 57% more on gas and electricity at the height of the crisis, after adjusting for inflation, compared with before the pandemic.

And there is fresh pressure on bills this autumn.

The report says the conflict involving Iran has pushed energy prices higher again, raising concerns about another increase in inflation.

Ofgem’s energy price cap increased by 4% from 1 October 2026, taking the typical annual figure to £1,723 for a household using a typical amount of gas and electricity and paying by Direct Debit in England, Scotland or Wales.

The cap limits how much suppliers can charge per unit of energy and in daily standing charges. It does not mean every household’s bill is fixed at £1,723.

The rise also does not directly affect people on fixed energy tariffs.

Want to check what the latest energy price cap means for your household? Our October 2026 energy price cap guide explains the new rates, how the cap works and what to check on your own bill.

The Resolution Foundation also warns that inflation could rise above 4% early in 2027 because of further pressure on energy prices. This is a forecast, not a confirmed increase.

More families are falling behind on their bills

The report also highlights the longer-lasting damage caused by rising costs.

In March 2026, 18% of households in the poorer half of the population were behind on utility or other household bills.

That compares with around one in ten in September 2020.

Among poorer households renting their homes, 22% were behind with rent payments, approximately double the proportion in 2020.

These figures show that the problem goes beyond higher prices.

Some households are still dealing with missed payments and debts that built up when costs rose sharply.

What help is available if you’re struggling?

The Resolution Foundation is calling for the government to focus any new cost-of-living support on households with the lowest incomes, particularly through help with energy bills.

This is a recommendation from the think tank, not a new government announcement. The report does not introduce any new payments or changes to benefits, and there is no £2,900 payment to claim.

If household bills are already difficult to manage, there are some practical steps you can take:

• Check your energy tariff. Find out whether you’re on a fixed deal or a standard variable tariff and compare costs using your own energy use.
• Speak to your energy supplier. If you’re struggling to pay, ask about an affordable payment plan or other support.
• Check what help you’re entitled to. Depending on your circumstances, you may qualify for help with energy bills, Council Tax or other essential costs.
• Get free debt advice. If you’re behind on several bills, getting help early can stop problems becoming more expensive.

If you’re finding it difficult to cover your essential costs, our guide to what to do if you can’t pay your bills explains what steps you can take, who to contact and where to find help.

Why the cost-of-living squeeze is still being felt

Although inflation is much lower than its 2022 peak, years of higher prices have left many households struggling to make ends meet.

The £2,900 figure shows how far household incomes have fallen behind expectations, and why the effects of the cost-of-living crisis are still being felt.