UK renters and poorest households hit hardest by inflation

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UK renters and the poorest households were hit by higher inflation than other household types in June, according to new figures that highlight the uneven impact of the cost of living crisis.

Household cost annual inflation for private renter households hit 4.5 per cent in June 2025, the highest of any other socio-economic group and well above the 3.9 per cent for the whole population, the Office for National Statistics said on Thursday.

It compared with 3.4 per cent for outright owner occupiers, which experienced the lowest annual inflation rate of all groups following cuts to mortgage rates in the past year.

Low-income households also experienced higher than average annual inflation rising by 4.1 per cent in June, compared with 3.8 per cent for high income households.

Overall household costs inflation accelerated from 2.7 per cent in March, with low-income households overtaking the highest income for the first time since 2023.

The figure compares with a headline consumer annual inflation of 3.6 per cent in June, which rose further to 3.8 per cent in July. The household cost indices reflect how much different types of households spend on various items, while the headline consumer index use a fixed basket of goods and services.

As a result the household costs indices offer “insight into the inflationary experience of different household groups,” stated the ONS.

The indices also include changes in mortgage interest rates, stamp duty and other costs related to the purchase of a dwelling, which are omitted in the consumer price index.

The ONS said the higher costs for tenants reflected rising private rental payments, which rose at an annual rate of 6.7 per cent in the year to June, according to separate ONS statistics, declining from an all-time record high of 9.1 per cent in March 2024.

The ONS explained that inflation rates for low-income households started to increase from October 2024 with electricity, gas and other fuels contributing more to rising costs in June than for high-income households.

“This is because of increases in the costs of electricity and gas from April 2025,” stated the ONS.

Food and non-alcoholic beverages, whose prices have been accelerating this year, also had a greater contribution for low-income households.