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Analysis

Paying with our health
Impacts of the cost-of-living crisis

Published 26 October 2026
Time to read clock icon About 16 mins
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Key points

  • Andy Burnham has pledged to make the cost of living a priority, and the upcoming Budget presents an opportunity to turn commitments into practical support. Food and energy costs are putting people at risk of being unable to afford healthy food or a warm home, and further widening existing inequalities. 
  • The cost-of-living crisis is a health crisis. When people cannot afford nutritious food or to keep their homes warm, their physical and mental health suffer. 
  • Households are already reducing energy use, buying less or cheaper food, reducing savings or relying on credit and support from others. These coping strategies can damage health through poor diets and cold or damp homes, while financial strain can worsen mental wellbeing.
  • The poorest households face a triple crunch, with the cost of essentials substantially higher than before the cost-of-living crisis, incomes struggling to keep pace with rising prices and essentials taking up a larger share of household spending. In 2024/25, food, housing, fuel and power accounted for 42% of spending among households on the lowest incomes, compared with 19% among households on the highest incomes.
  • Between 2019/20 and 2024/25, financial pressures on poorer households intensified by almost twice as much as for households on higher incomes. The share of household spending that went to essentials increased by 14% among households on lower incomes, compared with 8% among households on higher incomes, and there was a much sharper rise in real-terms spending on essentials for households on the lowest incomes (17%) than for those on the highest incomes (1%). These differences really matter for health.
  • Unequal pressures reinforce existing health inequalities. In 2025, 36% of households in the most deprived areas in England experienced low or very low food security, compared with 14% in the least deprived areas. People with long-term health conditions were also substantially more likely to experience very low food security.
  • The immediate priority should be to support households through the winter helping to protect their health. The government should target support with energy costs towards those most at risk, including through the existing tax and benefit system; extend and promote support with problem debt through the Breathing Space scheme; and increase the local housing allowance to ease pressure on private renters.
  • Long term, improving the energy efficiency and quality of existing homes through the Warm Homes Plan would help households both afford their bills and maintain healthy homes. Acting early will also help avoid the wider costs of ill health for individuals, the economy and the NHS. 
 

Introduction

The cost-of-living crisis is a health crisis. Financial pressures shape what food people can afford, how much they can heat their homes and whether they can absorb unexpected costs. These pressures are often felt most acutely by households with the fewest financial resources, increasing their exposure to risks that can damage health directly, such as being unable to afford enough to eat or heat their home, as well as indirectly through stress and uncertainty from financial strain.

Uncertainty and supply pressures in global energy markets from ongoing conflicts and geopolitical uncertainty in the Middle East and Ukraine have left the UK with a sustained cost-of-living crisis. This prolonged strain on people trying to make ends meet is increasing the likelihood of long-term health consequences. It is a particular risk to children spending their formative years with inadequate resources. 

In his first speech on the steps of Downing Street, new Prime Minister Andy Burnham pledged to provide ‘breathing space’ for households struggling with the cost of living. The government has since introduced measures to ease pressures on household finances, such as removing VAT from household energy bills and reducing the bus fare cap to £2. But these will not be enough to offset the high energy costs households are set to experience this winter, or the sustained price increases for essentials the UK has experienced in the past 5 years. Making significant further commitments on the cost of living will be difficult in the currently constrained fiscal environment but must be a priority to protect the nation’s health. 

This is particularly urgent for those most at risk of health harms from financial pressures. The cost-of-living crisis is not affecting everyone equally. People living in more deprived areas are both more likely to experience poorer health and have fewer financial resources to fall back on when costs rise. Understanding how households are responding to these pressures is critical to inform effective action and avoid the types of health-harming responses observed in the previous cost-of-living crisis. 

Between 2019 and 2022, the proportion of adults unable to afford heating rose by more than five-fold, and food insecurity more than tripled relative to pre-pandemic levels. Families living on lower incomes were twice as likely to report cutting back their spending on essentials. Short-term financial measures are required this autumn, but the government must also address the structural issues leaving some households more exposed to financial shocks.

In this analysis, we explore how rising costs of essential goods and services, particularly food and energy, are affecting health and health inequalities. We examine the pressures households are facing, the ways people are adapting and the implications for health.

 

The squeeze on household finances

Inflation is once again increasing, and remains higher than the long-term average. The effects of the sustained cost-of-living crisis also continue to be felt, with the cost of essential goods and services remaining substantially higher than before the crisis began. 

Figure 1 shows that annual inflation, measured by the Consumer Prices Index including owner occupiers' housing costs (CPIH), has fluctuated throughout the cost-of-living crisis, reaching a peak of 9.6% in October 2022. In the 12 months to August 2026, CPIH inflation rose to 3.3%, up from 3.1% in July. The persistence of elevated inflation highlights the continued pressure on household living costs. The Bank of England expects inflation to rise again in the coming months, driven by energy costs.

In May 2026, 89% of adults identified the cost of living as one of the most important issues facing the UK, while 66% reported that their own cost of living had increased compared with the previous month. Among those reporting higher costs, the most commonly cited reasons were food, fuel and energy prices. Food prices have outstripped inflation growth by 20% since 2021, and energy prices by more than double. 

Figure 1

Households have had to shift from managing rapidly increasing prices to coping with a permanently higher cost of living. Now, they must also cope with a further energy-led price shock. 

Incomes on average have only just kept pace with cost pressures in recent years. Median household income increased by 48% in nominal terms between 2016/17 and 2024/25, compared with a 35% cumulative increase in overall prices. However, price rises have been considerably higher for some essentials, with food prices rising by 41% and energy prices by 75% over the same period. With income growth expected to slow over the coming years, many households may have limited capacity to absorb further increases in the cost of essentials, particularly those on lower incomes.

When households cannot absorb higher costs through increased income or existing financial resources, they often adjust their spending behaviours. Resolution Foundation analysis, funded by the Health Foundation, found that 75% of adults reported cutting back on spending during the cost-of-living crisis. This most commonly included reducing energy use and buying less or cheaper food. Around 33% reported saving less to make ends meet, while others relied on savings, credit or support from family and friends. 

These responses were particularly common among households living on lower incomes. Households on lower incomes are more exposed to cost-of-living pressures because their spending on essentials accounts for a much larger share of their budgets. 

According to the Office for National Statistics (ONS) Family Spending Survey for 2024/25 (the latest year for which detailed household spend data are available), households in the lowest income decile spent an average of £60 per week on food and £100 per week on housing, fuel and power, accounting for 42% of total household expenditure (see Figure 2). By contrast, households in the highest income decile spent £89 per week on food and £150 per week on housing, fuel and power, but these costs represented just 19% of their total expenditure.

Between 2019/20 and 2024/25, financial pressures on poorer households intensified by almost twice as much as for households on higher incomes. The share of household spending that went to essentials increased by 14% among households on lower incomes, compared with 8% among households on higher incomes, and there was a much sharper rise in real-terms spending on essentials for households on the lowest incomes (17%) than for those on the highest incomes (1%).

Figure 2

These differences really matter for health. Households on lower incomes have less room to adjust their budgets when prices rise, increasing the risk that they go without the essentials that support good health. People living with long-term illness or disability may face additional financial pressures, as they often have higher unavoidable costs associated with their health or access needs, including higher energy use, specialist equipment, transport and personal care. The Research Institute for Disabled Consumers found that 39% of disabled respondents described their household finances as difficult or very difficult, while 52% could no longer afford everything they needed for their impairment, condition or access needs.

Households on lower incomes face a triple crunch from rising costs of essentials, their incomes not keeping pace with prices and having to spend a larger proportion of their incomes on essentials. These households are most vulnerable to a cost-of-living-led health crisis.

 

How housing and energy costs affect health

A warm, safe and secure home is a key foundation of good health. An adequately heated home supports physical health and mental wellbeing while reducing exposure to risks such as damp and mould. Cold homes and exposure to damp and mould are associated with respiratory illness and other health problems, and can also harm mental health. Children, older people and people with existing health conditions are particularly vulnerable. Government guidance estimates that damp and mould in homes in England were associated with around 5,000 cases of asthma and 8,500 lower respiratory infections in 2019. 

Cold homes are also linked to excess winter mortality. There were over 35,000 excess winter deaths (those exceeding an expected number) in England and Wales in 2022/23. Evidence suggests around 1 in 5 excess winter deaths are associated with living in a cold home, and 1 in 10 are directly attributable to fuel poverty. However, recent mortality trends have been affected by factors including COVID-19 and seasonal respiratory infections, making it difficult to isolate the impact of rising energy costs.

ONS data show that 35% of adults reported using less fuel at home because of the cost of living between January and March 2026. During the 2022–23 energy crisis, 34% of adults in Great Britain said that cutting back on heating their home had negatively affected their health and wellbeing. Evidence suggests these impacts were deepening existing inequalities, with this number increasing to 44% among adults living in the most deprived areas of England, compared with 27% in the least deprived areas.

Energy costs place a greater burden on households on lower incomes, as they account for a larger share of their spending. As shown in Figure 2, households in the lowest income decile spent 8.5% of their total weekly expenditure on energy in 2024/25, compared with 3.7% among the highest income decile. When bills rise, households with less financial flexibility may have to reduce energy use or cut back on other essentials to make ends meet. 

These pressures are compounded by inequalities in housing quality and inadequate financial support for private renters on low incomes. Households on lower incomes are more likely to experience fuel poverty and live in poor-quality, less energy-efficient homes. As shown in Figure 3, 17.4% of people in the lowest income quintile lived in non-decent homes in 2023, compared with 10.7% of those the highest income quintile. Households least able to afford higher bills are also more likely to live in homes that are harder and more expensive to heat. 

Figure 3

Analysis by our Networked Data Lab highlights the health implications: children living in homes affected by damp and mould are more likely to experience respiratory and mental health conditions, while older people experiencing fuel poverty are more likely to have a respiratory illness, chronic pain and poorer mental wellbeing.

Some people are at greater risk of health harms from higher energy costs. A 2026 survey by the ONS found disabled adults were more likely than non-disabled adults to report reducing their fuel use at home (43%, compared with 32%). For people with health conditions or specialist equipment, reducing energy use may be particularly difficult because their energy needs can be higher or less flexible. Cutting back can make it harder to maintain a warm, healthy home.

For private renters on lower incomes, rising rents and frozen support are placing additional pressure on household budgets. The Resolution Foundation estimates that by October 2026, local housing allowance, which provides rent support for households on low incomes, will cover 23.3% less than typical rents at the lower end of local markets. When rent takes up too much of a household’s income, there is less left for heating, food and other essentials. In 2024/25, 58% of working-age adults in private-renting families receiving housing support experienced material deprivation. Around 1 in 5 could not afford to keep their home warm, and 1 in 8 could not afford three meals a day. 

Energy affordability and housing quality are closely linked to health. Helping households afford to heat their homes matters, but long-term action is required to ensure decent, energy-efficient housing and housing support that keeps pace with rents. Without action on both, households on lower incomes risk facing high costs alongside living conditions that undermine their health.

 

How food affordability affects health

Higher energy costs can impact food prices, compounding the direct pressure of higher energy bills. Access to affordable, nutritious food is a fundamental determinant of health. A healthy diet supports physical and mental wellbeing throughout life. Adequate nutrition is particularly important during childhood, when it underpins growth and development. When rising costs and constrained household budgets make it harder to afford healthy food, the consequences for health can be both immediate and long term. Poor diet quality and food insecurity are associated with a range of adverse health outcomes, including obesity, type 2 diabetes and poor oral health. Food insecurity can also affect mental wellbeing, with uncertainty about accessing enough food contributing to stress, anxiety and poorer quality of life.

Many households are responding to rising food costs by changing what and how much they buy. Those facing the greatest financial pressures are more likely to reduce spending on fresh food, switch to cheaper, less healthy alternatives or reduce food intake. The ONS Opinions and Lifestyle Survey found that, between January to March 2026, around 16% of people in the most deprived neighbourhoods in England reported spending less on fruit and vegetables to save money on food, double the rate seen in the least deprived neighbourhoods (8%). Families with dependent children were also more likely to report buying cheaper food than households without dependent children (60%, compared with 47%). These data show that rising food costs are affecting what households buy, with some more likely to have to reduce spending on foods that form an important part of a healthy diet.

For some households, the impact of financial pressures extends beyond changes in diet to food insecurity – limited or uncertain access to sufficient, safe and nutritious food due to a lack of financial resources. Data from the Food Standards Agency show that between 2020 and 2025, the proportion of households in England experiencing low or very low food security rose from 26% to 36% in the most deprived areas, compared with an increase from 7% to 14% in the least deprived areas. Food insecurity rose more sharply among people with a long-term health condition, from 20% to 33%, than among those without one (13% to 16%). Food security also varies significantly by region, with the proportion of households experiencing low or very low security in 2025 ranging from 26% in the North East of England to 17% in the South East. These trends highlight how food insecurity is becoming more pronounced among people already facing socioeconomic disadvantage or poorer health, risking further widening health inequalities.

Food bank use provides further evidence of the scale of these pressures. In 2024/25, food banks in the Trussell network distributed around 45% more emergency food parcels than in 2019/20, meaning the number of parcels distributed had not returned to pre-pandemic levels (see Figure 4). Food parcel distribution is not a direct measure of demand, as changes in the availability and provision of food aid may also affect the number of parcels distributed. However, alongside survey evidence of food insecurity and changes in food purchasing, this figure points to continued difficulty affording food for some households.

Figure 4

The impacts of rising food costs are occurring against a backdrop of existing health inequalities. People living in more deprived areas already experience worse diet-related health outcomes than those in less deprived areas. For example, our analysis shows that 26% of children in the most deprived areas are overweight or obese, compared with 17% in the least deprived areas. These inequalities are also shaped by the food environment. Fast food outlets are more prevalent in more deprived areas, while healthier food remains less affordable: research shows that healthier foods costs around twice as much per calorie as less healthy foods. 

The health consequences of higher food prices are not shared equally. Without action, rising food costs and increasing food insecurity are likely to reinforce and widen existing health gaps.

 

The mental health toll of financial strain

The cost-of-living crisis affects more than people’s ability to afford food and heat their homes. Prolonged financial pressure can also harm mental health. Worrying about how to pay bills, afford essentials or repay debts can leave people feeling constantly under strain, unhappy or depressed, and unable to sleep. In the previous cost-of-living crisis, 35% of people in the lowest income fifth of the population said rising living costs had made their health worse, compared with 20% in the highest income fifth.

Financial difficulties can damage mental wellbeing, while poor health can make it harder to maintain financial security and leave people with fewer resources to cope with unexpected costs. This can create a cycle that is difficult to break. We found that nearly two-thirds (63%) of people in problem (unmanageable) debt experienced medium or high anxiety, compared with 41% of those not in problem debt. People in problem debt were also more likely to report less-than-good health (46%, compared with 23% of those not in problem debt).

Recent Citizens Advice data suggest debt pressures are growing. They found that the share of their clients with a negative budget is beginning to rise, while the depth of that deficit has doubled since the start of 2026. The amount of debt held by their average client requiring support with debt has reached £10,000 for the first time, and debt is set to exceed 6.5 times income for the first time since the start of 2020. 

 

What government can do

The Budget presents an opportunity for the government to make good on the prime minster’s commitment to give struggling households more ‘breathing space’ by taking action on the cost of living, which can also protect health. The challenge will be providing direct support this winter, and into next year, while operating within tight fiscal constraints.

On energy costs

Most immediately, the government should prioritise support that helps households afford essentials and cope with problem debt. With the energy cap increasing in October and forecast to reach £2,000 in January 2027, support with energy bills must be a priority. Despite the enduring cost-of-living crisis, government still has not developed a targeted approach to tackling energy costs. The Resolution Foundation has proposed a targeted energy discount for households on lower incomes, using HMRC income data to help determine eligibility. While automatic enrolment would take time to establish, self-declared income, verified by HMRC, could be used to offer a more targeted alternative to universal support this winter.  

Another way to target support is through smart meters. 75% of domestic properties have a smart meter, which could be used to identify households that do not respond to cold spells with increased energy usage. Smart meters could provide a way to target and offer support or provide a welfare check in real time for people most at risk of being unable to heat their homes.

On housing costs

Increasing the local housing allowance back to the 30th percentile of local rents should also be a priority, after it was frozen in 2024. This would provide a clear and relatively quick way to target support for renters on lower incomes who have experienced significant rent increases. 

On problem debt

Further easing pressures from problem debt would be a practical and achievable measure over the coming winter. The existing Breathing Space scheme provides 60 days (longer if in mental health crisis) to receive debt advice with protection from creditors. However, Citizens Advice have found this facility is underused, and people often need longer to deal with their finances. Therefore, creditor protection should be extended by at least 30 days and a wider awareness campaign instigated to boost take-up. 

On housing improvements

Over the longer term, government should reduce the costs that leave households exposed to financial shocks. This means delivering on planned improvements to the energy efficiency and quality of existing homes through the Warm Homes Plan. These measures could help reduce bills and make homes warmer and healthier. Homes most at risk of fuel poverty should be targeted, and as our forthcoming analysis shows, this can be informed using existing administrative and smart data. Use of this data should also be considered in developing a more targeted form of emergency support with bills in expectation of future shocks.

Prioritising these measures will not be easy. Public money is limited, and decisions about who receives support and how it is paid for will involve trade-offs. But the cost of inaction must be considered. If people cannot afford the essentials they need to stay healthy, the effects can be felt for years to come. Targeting support towards those under the greatest pressure can help ease hardship now and reduce the risk that existing health inequalities become wider.

 

Conclusion

Rising living costs do more than stretch household budgets: they present a threat to the nation’s health and could widen existing health inequalities. 

Households on low incomes face a triple crunch, with the cost of essentials remaining substantially higher than before the cost-of-living crisis, incomes struggling to keep pace with rising prices and essentials taking up a larger share of household spending. These compounded pressures leave households less room to absorb further increases and more likely to face difficult choices between having enough food to eat, keeping their home warm, reducing already squeezed spending in other areas or, as seems increasingly likely, rising debts.  

The government has taken some steps to ease pressure on household finances, but the scale and persistence of these pressures mean that, without more support, financial hardship risks worsening health outcomes and widening existing inequalities. The upcoming Budget is an opportunity to ease pressure on households facing the greatest hardship. Without effective support, the health effects of the cost-of-living crisis risk deepening inequalities for years to come.

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