The ONS released its latest Household Costs Indices this morning. They confirm what most households already know: real living costs are still rising faster than the headline inflation figure politicians rely on. UK household costs rose 3.6% in the year to March 2026. CPI inflation for April 2026 is 2.8%. The gap — 0.8 percentage points — is not technical. It is the difference between what the government says and what people feel.
CPI is the number ministers quote. It is also the wrong number. The Household Costs Index measures inflation as households actually experience it — including mortgage interest payments, rent, council tax and other housing-related costs that CPI excludes or underweights. For most families, these are not marginal items. They are the budget.
| Household type | Annual HCI inflation |
|---|---|
| Low-income households | 3.7% |
| Private renters | 3.7% |
| Social and other renters | 3.7% |
| Non-retired households | 3.7% |
| All households | 3.6% |
| Mortgagor households | 3.6% |
| Retired households | 3.6% |
| High-income households | 3.5% |
The monthly rate is one thing. The cumulative shock is another. Prices have not fallen back. They have reset at a permanently higher level.
| Household type | 5-year cumulative HCI |
|---|---|
| Mortgagor households | +37.6% |
| Social and other renters | +33.9% |
| Outright owners | +32.4% |
| Private renters | +30.7% |
Mortgagor households have seen their costs rise by 37.6% over five years. Wages have not kept pace.
Housing and household services remain the dominant reason HCI sits above CPI. Council tax and other rates alone contributed 0.22 percentage points more to HCI inflation than to CPI in the latest period. That wedge is structural. It will not disappear on its own.
Energy costs are also moving the wrong way again. The contribution of electricity, gas and other fuels to household cost inflation doubled between December 2025 and March 2026 — from 0.10 to 0.20 percentage points. Motor fuels shifted from 0.02 to 0.14 percentage points over the same period.
Food inflation is no longer the acute emergency it was at the 2022–23 peak. But the damage is already locked in. Prices have not reversed. A household does not care whether inflation has fallen from 11% to 3%. What they care about is that their weekly shop, mortgage and bills are still dramatically more expensive than they used to be.
Britain's inflation debate remains anchored to the wrong number. CPI came in at 2.8% for April. Ministers will cite that figure. What they will not say is that household costs are running at 3.6% — a gap of 0.8 percentage points that widens further for renters and lower-income households.
CPI was never designed to measure what households actually spend. It does not capture the full weight of mortgage costs, council tax or the true housing burden. Pointing to a falling CPI while households face a structurally higher cost base is not reassurance. It is a credibility problem.
Energy is the clearest example. The Ofgem price cap has kept bills elevated well above pre-2021 levels — and with the cap set to rise again in July, the energy contribution to household cost inflation is not going away.
The public is not confused. They understand perfectly well that lower inflation does not mean lower prices. They are simply being told the wrong story by people citing the wrong data.
The cost-of-living crisis did not end when CPI came off its 2022 peak. It was absorbed into everyday life. That is a different — and in some ways harder — political and economic problem. Voters are told the inflation crisis is fading while their direct debits keep rising. The cost-of-living crisis has not vanished. It has become normalised.