Cost of living series: What’s the impact?

Prices are skyrocketing on all levels, from energy bills and food shops to fuel and household necessities. The cost-of-living crisis is the story capturing the news and draining the funds of the nation.

We’ve been feeling the crunch for over a year now—and it seems the end is nowhere yet in sight. Yet the damage these financial fatalities are causing is already evident across the board, businesses are struggling, families are finding it hard to make ends meet, and households are stretching their paychecks beyond breaking point.

All this strain is causing damage that we can’t ignore, and it’s not just finances that are affected. The weight of these pressures bears heavily on the nation's health too. So in this three-part series, we’re going to dive deeper into the impact of the cost-of-living crisis, the future of mental health and how we can support each other.

Cost of living crisis statistics:

To gain insights into how the cost of living crisis is shaping our society, let’s first consider the statistics.

Financial impact:

Inflation in UK supermarkets has hit 17%, with families facing a potential £811 annual rise in the cost of their regular shopping basket¹.

Electricity prices in the UK rose by 66.7% and gas prices by 129.4% from January 2022-23².

Just under half (48%) of adults who pay energy bills said they found it very or somewhat difficult to afford them².

Workplace impact:

• Almost a third of Britons report that the cost of living crisis is impacting their ability to do their job properly².
• New data suggests employee theft has jumped by a fifth (19%) as the rising cost of living triggers a wave of workplace crime³.
• 31% reported working more hours and extra shifts over the last few months because of the increased living costs⁴.

The Effects of the Cost of Living on Mental health:

• Mental health of nearly 8 in 10 Britons surveyed is affected by the cost-of-living crisis (78% say the cost of living crisis is impacting mental health, rising to 94% for those with existing mental health problems)⁵. 
• Almost half (46%) of respondents said that their reason for fewer conversations is that everyone is struggling right now, and they don't want to burden others⁵.
• Two-thirds (66%) of therapists say cost of living concerns are causing a decline in people's mental health, according to our research⁶.

Beyond the bank balance 

The statistics speak volumes. It’s more than a numbers game, and it’s more than a news story—the cost-of-living crisis is impacting everyone’s life in some way. The problems are seeping into workplaces, households and supermarkets.

And while we might not be able to do anything directly about the soaring prices, we can gain some understanding around the implications of the changes we’re facing. Because knowledge is power, and once we shine a light on the issues at play, we can start to consider solutions and adapt to the reality we’re facing.

Economic issues work like a domino effect that slowly filters down to all other aspects of life and every individual. Let’s look at these factors in more detail below.

Lack of necessities 

Soaring prices in supermarkets mean that some people are now finding it hard to afford basic necessities. Statistics from the Trussell Trust network show that in 2022 (April-September), more people accessed emergency food parcels than ever before⁷.

Rising costs mean that people must cut back wherever they can. But not having the resource to afford some of life’s basic necessities is a major stressor. This stress can build up over time and start to impact both physical and mental health.

Workplaces at risk

In a recent survey Health Assured carried out, we found that 92% of employers believe that the cost of living crisis is the biggest threat to employee mental health in 2023⁸. 

This threat poses a business risk, as we know that poor employee mental health can have huge impacts on the UK workplace in the form of turnover, absenteeism, and productivity.

Figures estimate that poor mental health costs UK employers £45 billion a year⁹. So with this in mind, it’s clear to see just how detrimental the cost-of-living crisis could be to organisations big and small.

We also have to consider how the cost-of-living crisis impacts businesses across the UK. The hospitality, travel and leisure industries are at risk, with people not having as much disposable income to spare in these areas. In fact, any industry that falls beyond the category of necessity may experience a growing number of challenges in the coming months. There are also concerns for small independent businesses that are forking out for large energy bills while battling with a shrinking pot of customers.

The money-mental health cycle

Our mental health feeds into everything we do; how we interact with others, our ability to cope with the demands of life and our mood on a daily basis. That’s why financial worries can span right across the many facets of an individual's life.

Finances and mental health are inextricably linked. We know that young people in the lowest income bracket are 4.5 times more likely to experience severe mental health problems than those in the highest¹⁰.

Financial worries can lead to stress, anxiety and depression. And when you’re struggling with your mental health, managing your money becomes even more difficult. It’s a cycle that can be hard to step out of, yet it's vital that we learn how to as we move further into this challenging experience. Because this topic is so crucial right now, we'll take a more in-depth look at the future of mental health in the next article of this series: the cost of living crisis: making space for mental health.