Yahoo Finance 12 charts that show the cost of living increases in 2023
The worst of the UK's most sustained period of high inflation in decades appears to have come to an end in 2023. However, even as inflation fell from double-digits to 3.9%, there are many families that are still being squeezed by the cost of living.
From grocery prices to fuel and energy bills, these 12 charts breakdown the rising cost of living for UK households.
1. Food inflation
Year-over-year price increases in November for food purchased from UK grocery stores included sugar (40.4%), bread (3.2%), Eggs (12.9%), cheese and curd (7.1%), and tea (13.1%), according to data from the Office for National Statistics (ONS).
Read more: The shopping basket items that have changed most in price as inflation drops
2. Mortgage rates
New mortgage commitments — lending agreed by banks to be advanced in the coming months — shrank by 41.4% year-on-year in the third quarter of 2023, as high interest rates continue to take their toll on the UK housing market.
The average mortgage rate for a five-year fixed, 85% loan-to-value mortgage was 5.12% in the week to 20 December, according to Rightmove.
Read more: UK mortgage lending falls by over 40% as interest rates bite
3. Interest rates
The Bank of England (BoE) left UK interest rates on hold at a 15-year high of 5.25% in its final meeting of the year.
The BoE hiked interest rates in 14 consecutive meetings until they peaked at 5.25% in August, in an attempt to bring inflation back to the Bank's 2% target. The monetary policy committee (MPC) then decided to pause the hike-cycle, also leaving rates unchanged in the September and November meetings.
The BoE has said that borrowing costs would probably have to stay elevated for an extended period.
However, investors see a strong chance of a first rate cut by May. A rate cut in June is now fully priced in.
Read more: Bank of England holds interest rates amid expectations of cuts in 2024
4. Fuel prices
Petrol prices fell to their lowest in more than two years in mid-December, according to auto group the RAC.
A litre of unleaded petrol cost 142.57p on average at the pumps, a price not seen since the end of October 2021.
In October 2023, the RAC urged retailers to cut prices at the pump to reflect the drop in wholesale costs. It said the government’s 5p duty cut brought in shortly after Russia’s invasion of Ukraine last year was not benefitting drivers struggling to cope with the cost of living crisis.
Read more: Petrol and diesel price cuts not passed to customers, RAC says
5. Energy bills
The energy price cap will rise £94 (5%) from £1,834 to £1,928 in January, after conflict in the Middle East sent oil and gas prices higher.
Although this is lower than the highs seen in January 2023, it is significantly higher than two years ago, back in October 2021, when the price cap was £1,277.
Read more: The key money events for 2024, from NI changes to energy prices
6. Average UK house price
UK house prices dipped 1.8% in December compared with a year before, according to a monthly monitor by Nationwide, reflecting weak activity in the sector throughout the year.
The average price of a home was £257,443 in December, according to the lender.
Read more: UK house prices fell 1.8% this year, as interest rates squeeze mortgage affordability
7. Product inflation
Year-over-year price increases in November included men’s clothes (4.2%), men’s footwear (5.1%), women’s clothes (7.2%) and children’s clothes (6.7%), according to the ONS.
Although the pace of product inflation slowed in November, the rate of inflation accelerated month-on month for some products, including children’s footwear and women's footwear.
Read more: What the autumn statement means for your finances
8. Air fares
Air fares rose 3.3% year-on-year in November, according to the ONS.
Read more: Inflation: What is it and what does it mean for you?
9. Bitcoin (BTC-GBP)
Bitcoin bounced back above $43,000 (£33,979) in December.
Analysts anticipate the approval of a spot bitcoin exchange-traded fund (ETF) in the US within weeks. A spot bitcoin ETF is a financial product that investors hope will open the gateway for mainstream capital to flood the crypto market.
Read more: Crypto's movers and shakers of 2023
10. Car insurance
Car insurance costs escalated by nearly 60% in the 12 months leading up to October 2023, according to data from Confused.com.
Read more: Trust in insurers nosedives as car insurance premiums soar
11. Gold (GC=F)
Gold headed for its first annual gain in three years on the last trading day of 2023 as investors doubled down on bets that the US Federal Reserve will start to unwind its restrictive monetary policy stance in 2024, according to Bloomberg.
Bullion was steady on the final trading day, putting it on track to end the year about 13% higher.
12. Broadband
Telecoms companies included inflation-plus price rises in their contracts to cover increased costs in 2023, with consumers facing hikes in bills of around 14% earlier this year from providers including market leader BT (BT-A.L), according to Reuters.
In December, regulator Ofcom proposed banning inflation-linked price rises in the middle of customers' broadband and mobile contracts, saying the practice was unfair on consumers and hampering competition.
Watch: Half of London boroughs could face £2,000 average council tax bills from april in latest cost of living blow
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