The cost of living has been increasing across the UK since early 2021. In May 2022, the annual rate of inflation was the highest it has been since 1982.

The Library briefing Rising cost of living in the UK provides a detailed overview of the drivers of inflation in the UK, Government policy to support households, and the impact of rising prices on households, particularly low-income households.

Rising prices

Consumer prices, as measured by the Consumer Prices Index (CPI), were 9.1% higher in May 2022 than a year before.

Increases in the costs of consumer goods, underpinned by strong demand from consumers and supply chain bottlenecks, have been one factor behind rising inflation. Another important driver of inflation is energy prices, with household energy tariffs increasing and petrol costs going up. From May 2021 to May 2022, domestic gas prices increased by 95% and domestic electricity prices by 54%.

Impact on households

91% of adults in Great Britain reported an increase in their cost of living in June-July 2022.

The Institute for Fiscal Studies estimated that households in the lowest income decile faced an inflation rate of 10.9% in April 2022, 3 percentage points higher than inflation faced by the highest income decile. Low-income households stand to benefit the most from the February and May 2022 cost of living support packages.

Government policies

Senedd Research paper Support with cost of living pressures provides details on support provided by the UK and Welsh Governments. The Library briefing The Social Security (Additional Payments) Bill 2022-23 provides more detail on UK Government support.

Government support, estimated at £37 billion, includes:

  • £400 off energy bills for all households
  • £650 payments for households receiving means-tested benefits with additional payments of £300 for pensioners and £150 for people receiving disability payments
  • a £150 council tax rebate for households in council tax band A-D (the Welsh Government received equivalent funding through the Barnett formula, but is also providing this support under the Cost of Living Support Scheme.)
  • a 5p cut to fuel duty
  • an increase in the threshold at which NICs begins to be charged on earnings

In April 2022, the UK Government also brought in tax rises, for both income tax and National Insurance contributions (NICs). Once these changes are included, the net level of government support is worth around £14 billion in 2022/23.

Parliamentary Material

Support for the Welsh Economy and Funding for the Devolved Institutions, HC Deb, 5 July 2022

Cost of Living in Wales, HC Deb, 22 February 2022

Public Expenditure: Wales, Written Question for Treasury, UIN 9973, Tabled on 26 May 2022, answered on 6 June 2022

Cost of Living: Wales, Written Question for Wales Office, UIN HL7570,Tabled on 31 March 2022, answered on 14 April 2022


Wales hit hardest by cost of living crisis with almost a quarter of households in ‘serious financial difficulty’, Nation Cymru, 11 July 2022

Inflation Piling Pressure on Welsh Businesses to Raise Prices, Business News Wales, 9 June 2022

One in five people in Wales have ‘no savings at all’ to weather cost of living crisis, research shows, Nation Cymru,11 May 2022

Cost of living sees young people in Wales living back at home, BBC, 20 April 2022

Cost of living in Wales: What financial help is there?, BBC, 6 April 2022

Wales to suffer most under energy price rises as ‘1 in 4 in poverty’, ITV, 18 January 2022

Research and further reading

Support with cost of living pressures, Senedd Research, 9 May 2022

One in four families get first government Cost of Living Payment from today, Gov.UK, 14 July 2022

Get help with the cost of living, Gov.Wales, 13 July 2022

Cost of living data tables – Wales, Ofwat, 12 May 2022

Lower income households and public services to feel the squeeze from higher inflation, Cardiff University, Wales Governance Centre, 24 March 2022

How is the cost of living crunch affecting heating, eating and housing in Wales?, Senedd Cymru, 10 March 2022

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