Cost of living report

The cost of living refers to the price you have to pay to maintain a decent standard of living. While this is affected by how much you earn, other factors such as inflation, taxes and things such as the COVID-19 pandemic all affect the cost of living.

Although the cost of living crisis has undoubtedly got worse in the last year, some families have been struggling for much longer than that. But which parts of the country are worst affected? And how have things changed in the last five years? We have looked into a number of government sources and other resources to find out.

If you’re looking to save money at the moment, why not compare 0% balance transfer credit card deals to see if you can reduce interest on your existing debts?

Rent

Top 3 most and least expensive places for rent in the UK

Housing is one of the biggest costs that the public face, especially for those who are renting properties. Demand for housing remains high, especially in major urban city centres.

With that in mind, it’s perhaps not surprising that 19 out of the top 20 most expensive places to rent are found in London.

Kensington & Chelsea is the most expensive, with the average renter paying £2,971 per month in this affluent area of the capital.

Top ten most expensive places to rent in the UK

The area that has seen the biggest increase in rents is still among the most affordable. Blaenau Gwent, in south-east Wales, has seen rents go up by 45.3% in the last five years, although it still costs just £567 a month.

If you'd like to read more on this topic, we've collated the latest UK cost of living statistics and trends, covering inflation rates, average UK living costs, income, house prices, and more.

House prices

Top 3 most and least expensive places to buy a house in the UK

Getting on the property ladder is harder than ever before and house prices have continued to increase, even in the face of the pandemic.

As with rents, demand is highest in London and the South, with Kensington & Chelsea once again being the most expensive place, at £1,513,711.

Top ten most expensive places for house prices in the UK

Prices have increased the most in the last five years in the Scottish council area of Na h-Eileanan Siar, better known as the Outer Hebrides.

Here, the average house price has increased by about three quarters, from £91,482 in 2017 to £159,288 in 2022.

Utilities

Energy bills are one of the most contentious living costs that are on the rise currently, with demand for gas increasing, while supply is being limited.

Electricity

Top 3 most and least expensive places for electricity bills in the UK

Those on Merseyside and in North Wales pay the most for their electricity, with an average unit cost of 22.41p per kWh. In real terms, that equates to £807 a year.

Residents of Northern Ireland pay the least, with a unit cost of 19.43p per kWh and £699 per year.

Top 15 most expensive places for electricity bills in the UK

However, Northern Ireland also has seen the greatest increase in prices, up by 34.3% between 2017 and 2021.

Gas

Top 3 most and least expensive places for gas bills in the UK

London pays the most when it comes to gas, at 4.27p per kWh, or £581 per year. That figure doesn’t vary too much around the country, with those in the North East paying £538 a year in comparison.

Top 14 most expensive places for gas in the UK

Those in South Wales have been hit the hardest when it comes to rising gas prices, which went up 5.6% between 2018 and 2021.

Council Tax

Top 3 most and least expensive places for Council Tax in the UK

You may think that Council Tax is highest in areas with the highest property prices, although to some extent, the opposite is true.

The average Band D prices paid in high-value areas in London like Westminster and Wandsworth are actually the lowest, at £829 and £845 respectively.

On the other hand, the average Band D property in Nottingham pays the most, at £2,226 a year.

Top 10 most expensive places for council tax in the UK

The area where residents have seen the greatest council taxi hike is Pembrokeshire, where the average Band D tax has risen by 40.4% in five years.

Northern Ireland domestic rates

Top 3 most and least expensive places for domestic rates in Northern Ireland

While residents in Northern Ireland don’t pay Council Tax, they do pay domestic rates, consisting of a regional rate set by Stormont and a district rate set by local councils.

Taking into account how these rates would be applied to the average house price in each area, those in Ards & North Down pay the most on average.

With an average house price of £187,947, being charged a rate of 0.872%, locals here can expect to pay around £1,639.

Fuel

Average retail cost per litre for different types of fuel

Another outgoing that has received a lot of media coverage is that of fuel, with some petrol stations charging as much as £2 a litre.

While the cost of fuel is fluctuating by the week, as of June 2022 it stands at £1.9272 per litre of unleaded, £1.8310 for premium unleaded and £1.9015 for diesel.

Those prices have all increased by more than double compared to the same month five years ago, as much as 61.8% for diesel.

Average retail cost per litre 2017-2019

Average retail cost per litre 2020-2022

Fuel cost 5 year difference

Groceries & other costs

Average weekly household expenditure for groceries & other costs

Looking at the cost of other everyday commodities and services such as groceries, these have increased by 11.5% in the last five years.

Spending has increased the most on restaurants and hotels (24.5%). However, spending in a couple of areas has decreased, including education, clothing & footwear and household goods & services.

Average weekly household expenditure

Average weekly household expenditure

Income

Areas with top 3 highest and lowest average annual incomes in the UK

While rising prices make it much harder to achieve a good standard of living, this is obviously offset by higher earnings.

However, earnings have largely failed to increase at the same rate as many of the costs above.

Unsurprisingly, the area with the highest property and rent prices is also the place with the highest earnings.

Kensington & Chelsea sees the average employee make £39,566, over twice as much as the lowest earning area, Melton, in the East Midlands.

In the last five years, earnings have increased the most in Na h-Eileanan Siar, the small group of Scottish islands better known as the Outer Hebrides, (40.8%). But in some areas, they’ve actually decreased (as much as -14.1% in Brentwood).

Pensions

Areas with top 3 highest and lowest average pension incomes in the UK

Those who are no longer working are amongst those affected the most by rising living costs, with saved pension pots not keeping up with inflation.

For a retired couple, the average pension income is highest in the South East, at £691.

Median weekly pension income (couples)

The area where this has increased the most is Northern Ireland, going up by just under a quarter. 

Median weekly pension income (couples)

Disposable income

Areas with top 3 highest and lowest disposable incomes in the UK

Taking into account the costs of the commodities and services above, and comparing them to average earnings, which region ends up with the most money left over?

Given that earnings are so much higher in London, it may be unsurprising that those in the capital have the highest estimated disposable income, at £329.20.

Disposable income

While this amount has increased by around a quarter in Northern Ireland, in the South East, disposable income has only grown by 1.7%.

What to do if you're struggling with debt

Dealing with debt can be disheartening and seem like an uphill struggle, but there are steps you can take to tackle it.

Prioritise your debts

Some debts are more urgent than others, so by making a list of all the amounts you owe, you can make sure you're dealing with your secured loans (mortgages and rent) before your unsecured loans (credit cards and overdraft).

Speak to your creditors

Although your creditors might feel like the last people you want to speak to whilst in debt, the Banking Code says that banks must be sympathetic towards people's missed payments, so get in touch with your lenders and explain your situation. They may be able to offer you a manageable repayment plan that enables you to pay back what you owe in smaller monthly payments.

Write a budget

Write out a budget that clearly shows you how much money you have coming in per month, what your bills are, and therefore how much extra spending money you can afford per month. This will not only help you figure out how much you can afford to spend on debt repayments, it can also highlight where you are over spending, and where to make cut-backs.

Ask for help

It's easy for debt to spiral out of control and become problematic, especially during the current cost of living crisis, but there is help out there. The government are providing help for households, so visit Help for households to find out what support you may be eligible for.

Inflation calculator

Ever wondered how inflation and the rising cost of living are affecting your household costs? You can use the Government's inflation calculator below to see how increases in the cost of living have affected you in the past year, and work out your personal inflation rate.

You can insert your household spending patterns into the calculator (categories include groceries, housing, transport and leisure) and it will estimate your personal inflation rate based on the current inflation rate.

You can also provide your income and the calculator will estimate your spending on other areas based on the average spending for a household on your income level.

For the most accurate results, make sure to include granular costs for as many outgoings as possible. Make sure you consider irregular purchases e.g new car or dress, and include the average amount this costs you over a week, month or year.