A household spending around £2,000 a month on essentials in 2021 now pays roughly £2,450 to £2,500 for the very same basket. That is an extra £5,400 to £6,000 a year, gone, before anyone has saved a penny or enjoyed a single luxury. Ministers boast that inflation has fallen. Out in the real world, families know the difference between prices rising more slowly and prices actually coming down.
Inflation Falling Is Not Prices Falling
This is the sleight of hand at the heart of the government's message. Inflation easing back to around 3 percent does not return a single pound to anyone's pocket. It simply means the elevated prices we are already paying are now baked in for good. The cost of the weekly shop, the energy bill, the rent and the bus fare all jumped and then stayed up. The squeeze did not end. It just stopped getting worse as quickly.
Fiscal Drag: The Stealth Tax
While prices stay high, the taxman quietly takes more. The personal allowance has been frozen at £12,570 since 2021 and is set to stay frozen for years to come. A worker on £30,000 who has had modest pay rises now earns around £36,000 but, because the thresholds never moved, hands over far more in income tax and National Insurance. This is a tax rise that no minister ever has to announce, because it is collected by stealth. It punishes exactly the working people Labour claims to champion.
Growth Choked by Tax
The OECD now forecasts UK growth slowing to around 1.2 percent, driven by higher taxes and tighter spending that drain household income and curb consumer demand. A high-tax, low-growth economy is a choice, not an accident. Tax businesses harder and they hire less, invest less and pass costs on to customers. Working families end up paying twice: once at the till and again in the wages that never rise fast enough to keep up.
What Reform UK Would Do
Reform UK would lift the income tax personal allowance so that lower earners keep more of what they earn and the stealth tax of fiscal drag is broken. We would back British business with a lower, simpler tax burden that rewards work and investment rather than punishing it. The way out of a cost-of-living crisis is to let people keep more of their own money and to grow the economy, not to squeeze households until the pips squeak.
Labour talks about falling inflation. Families are still up to £6,000 worse off. Those two things can both be true, and only one of them is being paid for by the British public.