Although inflation has eased from recent highs, many households across England continue to feel financial pressure. While headline figures suggest improvement, the reality for day-to-day budgets is more complex.

According to the Office for National Statistics (ONS), CPI inflation stood at 3.0% in January 2026, down from 3.4% in December 2025. However, this reflects a slowdown in price increases — not a reduction in the cost of living.

Even with lower inflation, essential costs such as food, housing and household services continue to increase, often at rates above the headline figure.

For many households, this means that monthly outgoings are still rising, just not as quickly as before. If costs increased significantly during 2022–2025, those higher price levels are now the starting point — not something that has reset.

A useful way to think about inflation is that it measures the speed of price increases, not the direction. Prices are still moving upwards, even if the pace has slowed.

For most people, financial pressure is shaped more by actual spending than by economic indicators.

Household budgets are based on what needs to be paid each month — rent, bills, food and transport — rather than the rate at which prices are changing. If those costs remain high, day-to-day affordability may not improve.

In some cases, households may also still be adjusting to earlier increases. Savings may have been used, or borrowing may have increased during periods of higher inflation, which can continue to affect financial flexibility.

Housing costs continue to be one of the largest expenses for many households. Average private rent in England reached £1,423 in January 2026, according to the ONS, reflecting ongoing upward pressure.

At the same time, the Bank of England base rate remains at 3.75%, which continues to influence the cost of borrowing. This can affect credit cards, overdrafts and personal loans, increasing the cost of repayments even where balances have not grown.

Together, higher housing costs and borrowing costs can significantly reduce the amount of disposable income available each month.

• essential spending (such as rent, bills, food and travel)
• total unsecured debt repayments
• your take-home income

If there is little or no surplus after covering these costs — or if you are relying on credit to make up the difference — this may indicate that your budget is already under pressure.

For a clearer breakdown of what counts as essential, you may find our guide on priority vs non-priority debts explained helpful.

If essential costs are consistently higher than your income, it may be necessary to review spending priorities and look at ways to reduce reliance on credit.

At Money Advisory Centre, we can help you understand the options available and provide a clearer picture of your financial position. Seeking support early can make it easier to address problems before they escalate.

Debt solutions are not suitable for everyone and may affect your credit rating. The right option depends on your individual circumstances.

Has the cost of living crisis ended in the UK?
No. While inflation has slowed, overall price levels remain high and continue to increase.

Why does life still feel expensive if inflation is lower?
Because prices are still rising from an already higher base, meaning everyday costs remain elevated.

Who is most affected by ongoing cost pressures?
Households with high housing costs, low savings or existing debt are often more exposed to continued financial strain.