With rates falling and inflation at 3.2%, it is tempting to ask: Is the cost of living crisis over? The answer from the Bank of England’s latest report is a nuanced “No, but it’s changing.”
The crisis of rising prices is ending. The crisis of high prices is here to stay. Prices are not going back to 2021 levels; they are just stopping their rapid ascent. A 3.75% mortgage is cheaper than 4%, but double the 1.5% of the past.
The rate cut marks the transition from “crisis” to “adjustment.” We are adjusting to a poorer reality where everything costs more, but the panic is subsiding.
For the poorest, the crisis remains acute. The rate cut helps borrowers, not those on the breadline. The “fragile economy” means their jobs are at risk even as their bills stabilize.
So, 2026 is not the year of plenty. It is the year of stability. The bleeding has stopped, but the patient is still weak.
