2024 has been a rollercoaster for household finances - expect more of the same in 2025
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It has been another rollercoaster year for millions of households when it comes to their finances. Take inflation, which has come down from its punishing highs but continues to hammer family budgets. And while many bills are not rising as fast now as at the start of the year, barely any have gone into reverse.
And the increases seen this year add to the misery already inflicted during the cost of living crisis. Here we examine what elements of household finances have gone up, which are coming down, and what the prospects for each heading into the new year. Inflation in the UK peaked at a budget-busting 11.1% in October 2022, the highest in over 40 years. But the surge began to ease in 2023 and by the start of 2024 the consumer prices index measure of living costs was down to 4%.
Within even that, some of the things that families buy most often continued to soar. The average price of food and drink, was instance, started the year rising at a rate of 8%, while clothing and footwear remained over 6% more expensive than the prior January.
Fast forward to now and inflation stood at 2.3% in October - with the Office for National Statistics due to give an update on Wednesday. To show we are not out of the woods, the rate was up sharply from 1.7% in September, driven by higher energy bills.
Experts are split on what happens to inflation next year, with some forecasting upward pressure from April’s changes to employers’ national insurance, which could feed through to price rises. The Bank of England thinks it is likely to edge up to about 2.75% in the second half of next year before falling again.
