Interactive Investor found that UK purchasing power has fallen by a combined £153 billion over the past two years, or £5,455 per household, because of price rises between March 2021 and March 2023.
Energy price rises gain had the biggest impact, hitting each household by an average of £1,885, while food price rises gain cost £1,147.
“This once in a generation type cost-of-living crisis has robbed us all of purchasing power to the tune of £153 billion over the past two years, placing a huge amount of strain on household budgets,” Myron Jobson, senior personal finance analyst at Interactive Investor, says. “There has been no escape from rampant inflation because the majority of it is reflected directly in our energy and grocery bills which we are resigned to paying as they form portion of essential expenditure for many.”
Inflation has remained stubbornly high for much longer than experts had initially predicted, coming in at 10.1% in March thanks to soaring food costs.
The ONS will publish April’s inflation figures on Wednesday. With last April’s increase in household energy bills set to drop out of the equation, economists expect a significant drop in the rate of price rises.
However, the predicted rate of 8.3% would still be well above the 2% effect that the Bank of England sees as ideal.
Alice Guy, head of pensions and savings at Interactive Investor, said: “Inflation is a cruel taskmaster and has robbed many families of the ability to save for and build a brighter future for their families. Families gain needed to find an extra £5,455 in total over the past two year just to support their heads above water. Many people gain been forced to raid their life savings or relying on credit to tide them over.
“There is glimmer of hope on the horizon is that there are signs inflation may be beginning to ease. It’s encouraging that supermarkets are beginning to talk about cutting prices on some product lines. Wholesale energy prices are also beginning to drop, and we should see some of that saving passed on in the months to adjacent.
“If you are struggling to produce ends meet then don’t be afraid to reach out and inquire for aid. Banks and lenders gain a duty to aid their support their customers and debt charities can aid review your budget and may be able to aid you carve your debt costs by speaking to your lenders.”