The Price of Everything: Cost-of-Living Crises, Past and Present
By Matthew Parish
Thursday 17 September 2026
There is something peculiarly demoralising about a cost-of-living crisis. A recession announces itself with redundancies, bankruptcies and shuttered factories, while a financial crash arrives amid collapsing banks and panicked television presenters. War has its explosions and pandemics their hospitals. A cost-of-living crisis is quieter. The supermarket remains open, the lights still come on and salaries continue to arrive in people’s bank accounts. Yet somehow everybody seems to be becoming poorer.
The process takes place by increments. A cup of coffee costs a little more, the weekly supermarket shop becomes unexpectedly expensive, electricity bills rise and the landlord increases the rent. Mortgage payments jump when an old fixed-rate agreement expires. A restaurant that once seemed ordinary becomes an indulgence and a holiday is postponed. Eventually sections of the middle classes begin performing calculations that they previously associated with poverty: whether to turn the heating on, whether to take a taxi, whether meat is affordable this week and whether the children really need new clothes just yet.
Human societies have experienced this phenomenon many times before. Indeed the history of civilisation might partly be written as a history of struggles over the price of bread. What distinguishes the modern cost-of-living crisis is not therefore its existence, but the strange contrast between societies possessing extraordinary aggregate wealth and the growing financial insecurity of many of the people living within them.
The ancient politics of bread
Cost-of-living crises are almost as old as cities. Once populations became dependent upon markets rather than subsistence agriculture, political stability became intimately connected with the prices of basic commodities. Ancient Rome understood this particularly well. The annona, the elaborate system through which grain was supplied to Rome and distributed amongst sections of her population, was not merely an early form of social welfare. It was part of the political infrastructure of the Roman state.
Roman rulers understood something governments have periodically forgotten ever since: people may tolerate an extraordinary amount of political incompetence, but hunger possesses revolutionary possibilities. Maintaining the supply of grain to Rome was consequently a matter of political survival as well as logistics. The government that could not ensure affordable bread might discover that constitutional theories and imperial grandeur meant very little to a hungry crowd.
The same lesson repeatedly appeared in early modern Europe. Harvest failures drove grain prices upwards and, because poorer households spent an enormous proportion of their incomes upon food, apparently modest changes in agricultural production could produce catastrophic changes in living standards. Bread riots were therefore recurrent features of European history, although the people participating in them were not necessarily revolutionaries in the modern ideological sense.
Frequently the rioters believed that there was a morally correct price for bread and that merchants, millers or governments had violated an implicit social bargain. Economic historians have described this as the “moral economy”: the conviction that markets cannot legitimately be permitted to determine the price of everything when human survival is at stake. It remains an extraordinarily modern idea, even if contemporary governments express it through subsidies, welfare payments, regulated utility prices and emergency interventions rather than crowds outside bakeries.
Revolution at the bakery
The French Revolution had infinitely more complicated causes than the price of bread, but bread nevertheless mattered enormously. Poor harvests in the late 1780s contributed to sharply rising food prices at precisely the moment when the French monarchy was suffering an acute fiscal crisis. For poorer urban families, food represented an enormous share of household expenditure, so changes in the price of bread were experienced not as marginal inconveniences but as threats to survival.
This illustrates one of the most important characteristics of cost-of-living crises: they rarely operate independently. Instead they act as accelerants for existing political grievances. A population may tolerate an incompetent government while living standards are improving, corruption while wages are rising or conspicuous inequality while people believe their children will nevertheless enjoy better lives than their own. Inflation alters this political psychology because every transaction becomes a reminder that something is going wrong. The market stall, bakery or supermarket becomes, in effect, a polling station visited every day.
The political importance of prices therefore extends far beyond the technically economic question of inflation. People experience government partly through the difference between what they earn and what they can afford. Political institutions may be remote abstractions, but the price of dinner is encountered every evening.
Industrialisation and the price of survival
The Industrial Revolution altered the structure of the problem without abolishing it. Urban workers became increasingly dependent upon cash wages and could no longer fall back easily upon agricultural production when prices rose. Their economic existence depended upon a delicate relationship between wages, rents and food prices, all of which might change independently of one another.
The great political struggles over Britain’s Corn Laws were therefore not merely abstract arguments about comparative advantage. Cheap imported grain meant cheaper bread. Industrialists favoured repeal partly because cheaper food reduced pressure for higher wages, while landowners resisted because agricultural protection sustained their incomes. Behind the grand parliamentary speeches about free trade lay one of the oldest questions in politics: how much should dinner cost?
Industrialisation eventually generated extraordinary increases in productivity and material prosperity, but those gains were unevenly distributed and periodically interrupted by depressions, financial panics and commodity shocks. Modern economic growth did not eliminate the cost-of-living problem. It merely changed the mechanisms through which it appeared.
When money stops working
The twentieth century introduced inflation upon a scale made possible by modern states, modern banking and modern war. The extreme example remains Weimar Germany, where hyperinflation in the early 1920s eventually destroyed the usefulness of money itself. Prices changed with bewildering speed, savings accumulated over lifetimes disappeared and possession of tangible assets or foreign currency could become more important than decades of careful financial prudence.
Hyperinflation is qualitatively different from ordinary inflation because money begins to cease performing one of its fundamental functions: preserving purchasing power through time. The social consequences are profound because inflation redistributes wealth in ways that appear arbitrary. Debtors may benefit as their liabilities diminish in real terms, while savers and pensioners can be devastated. Someone who spent everything before the crisis may fare better than somebody who saved carefully for forty years.
That is one reason severe inflation is politically poisonous. It does not merely make people poorer; it can overturn their understanding of fairness. Thrift, prudence and deferred gratification cease to appear economically virtuous when the monetary system destroys the rewards those habits were supposed to provide.
Britain and the 1970s
For modern Britain, the most obvious historical comparison is the 1970s. The oil shocks mattered enormously, particularly after the 1973 Arab-Israeli war, but Britain’s inflationary difficulties also reflected domestic fiscal and monetary policy, wage bargaining, poor productivity growth and expectations that became increasingly embedded within economic behaviour.
Once everybody expects prices to rise, inflation can become partially self-sustaining. Workers demand higher wages because they expect higher prices, companies increase prices because their labour and other costs have risen and employees then seek further wage increases to restore their purchasing power. The danger is not that any participant behaves irrationally. On the contrary, each participant may be responding perfectly rationally to the behaviour expected of everybody else.
The British experience was particularly traumatic because inflation coincided with stagnation. Conventional post-war economic thinking had often treated unemployment and inflation as problems between which governments might trade, but the 1970s demonstrated that countries could experience both simultaneously. The resulting stagflation contributed to industrial conflict, pressure upon public finances and a profound loss of confidence in the post-war economic settlement.
Britain eventually sought assistance from the International Monetary Fund in 1976, an episode that acquired a significance far beyond the financial arrangements themselves. The wider crisis helped prepare the intellectual battlefield upon which Margaret Thatcher subsequently reshaped British economic policy. Inflation changed politics because it changed everyday life, and abstract arguments about monetary policy became arguments about what sort of country Britain ought to be.
The strange crisis of the 2020s
The cost-of-living crisis that began in earnest in the early 2020s had different origins but familiar characteristics. The COVID-19 pandemic produced an extraordinary economic experiment in which governments deliberately suppressed substantial parts of ordinary economic activity while simultaneously supporting household incomes through immense fiscal interventions. Central banks maintained exceptionally loose monetary conditions, consumers shifted expenditure from services towards goods, factories closed and reopened unpredictably and supply chains designed for efficiency rather than resilience encountered circumstances for which they had never been designed.
Inflation was already rising before Russia launched her full-scale invasion of Ukraine in February 2022. The war then intensified the shock through energy, grain, fertiliser and other commodity markets. Europe discovered the strategic price of its dependence upon cheap Russian energy, while households discovered that geopolitical decisions made thousands of kilometres away could appear within weeks on their electricity bills and supermarket receipts.
The subsequent decline in inflation produced one of the great misunderstandings of contemporary economic debate. When inflation falls, prices do not generally return to where they were before the inflationary episode; they merely rise more slowly. A household whose weekly groceries rose from £60 to £80 during an inflationary surge does not feel restored to prosperity when the same groceries subsequently rise from £80 to £82 rather than £88.
This distinction is economically elementary but politically enormous. Governments may announce that inflation has been defeated while voters continue to encounter the accumulated consequences of the inflation every time they go shopping. Economists measure rates of change, whereas households frequently remember levels. Both perspectives are legitimate, but they describe different aspects of the same experience.
Why modern life feels so expensive
There is another difference between contemporary cost-of-living crises and many of their historical predecessors. The modern household has acquired an extraordinary collection of recurring financial obligations: rent or mortgage payments, electricity, gas, water, local taxation, mobile telephones, broadband, insurance, transport, childcare, subscriptions, student debt in some countries and healthcare costs in others. Many of these expenditures cannot easily be reduced when household finances deteriorate.
Economic prosperity is therefore not determined simply by income but by what remains after unavoidable expenses have been paid. A household earning £4,000 each month with unavoidable expenditure of £2,000 possesses considerable economic freedom. If its income rises to £4,400 while unavoidable expenditure rises to £3,000, the household has received a nominal pay rise while becoming substantially poorer in the dimension that matters most to everyday life.
This explains why apparently respectable salaries increasingly coexist with feelings of financial insecurity. A household does not experience its prosperity through the number appearing at the top of a payslip. It experiences prosperity through the money left on the day before the next salary arrives.
Housing: the crisis inside the crisis
Housing has consequently become central to the modern cost-of-living problem. For much of the post-war period, rising property values enriched homeowners while reasonably accessible mortgage finance allowed subsequent generations to enter the market. In many developed economies that bargain has weakened or collapsed, particularly in economically successful cities where housing supply has failed to keep pace with demand.
Planning restrictions, limited construction, population growth, investment demand and the geographical concentration of high-paying employment have combined in different proportions to make housing extraordinarily expensive. The result is one of the stranger contradictions of modern civilisation. Societies technologically capable of producing smartphones containing extraordinary computational power nevertheless struggle to construct sufficient apartments near the places where people work.
For younger generations the consequences are profound. Their parents frequently accumulated wealth simply by buying houses and waiting, whereas their children may spend an enormous proportion of their incomes renting those same assets from older generations. What appears in national statistics as a housing shortage may therefore be experienced within families as an intergenerational redistribution of wealth.
Ukraine and the economics of war
In Ukraine the question has acquired another dimension altogether. War creates its own cost-of-living economy because infrastructure is destroyed, labour is displaced, supply routes become dangerous, electricity generation is attacked and insurance becomes expensive or unavailable. Businesses close or relocate, families lose incomes through displacement and mobilisation and government resources that might otherwise support public services must be diverted towards national survival.
At the same time war produces peculiar local distortions. Cities receiving large displaced populations experience pressure upon housing, while front-line communities may see ordinary economic activity collapse. Imported goods depend upon complicated logistics and interruptions to electricity create costs that never appear straightforwardly on a supermarket receipt: generators, batteries, alternative workplaces, damaged equipment and interrupted production.
The economic burden of war is therefore not adequately measured by inflation statistics. War consumes certainty, and certainty has an economic value because households and businesses make investments on assumptions about what tomorrow will resemble. Once those assumptions disappear, even decisions that previously seemed mundane become expensive exercises in managing risk.
Why the poor suffer first
Every cost-of-living crisis has a regressive quality because necessities dominate the expenditure of poorer households. A wealthy household can respond to higher food or energy prices by saving less, postponing the purchase of a second car or taking a cheaper holiday. A poor household has far fewer margins within which to make such adjustments because food, heating, electricity, transport and housing cannot simply be abandoned.
There is consequently something misleading about describing inflation exclusively through national averages. There is not one inflation rate in the lived experience of society but millions of different household experiences. The pensioner heating a poorly insulated house experiences one pattern of price increases, the young renter another and the suburban commuter another still. A wealthy homeowner without a mortgage may barely notice changes that transform the finances of a family whose fixed-rate mortgage has just expired.
Official inflation indices are indispensable because governments and central banks require common measurements. Yet nobody actually lives inside an index, and political discontent frequently develops in the gap between national statistical improvements and individual experiences that remain considerably worse than before.
The politics of resentment
This brings us to perhaps the most important historical lesson. Cost-of-living crises become particularly dangerous when people cease believing that economic sacrifice is being shared fairly. Human beings will tolerate extraordinary hardship under some circumstances, as wartime societies repeatedly demonstrate, but they are more likely to accept rationing, taxation and reduced consumption when they believe the burden is necessary and broadly shared.
What is harder to accept is impoverishment alongside conspicuous enrichment. Periods of inflation therefore generate anger towards bankers, landlords, corporations, energy companies, supermarkets, trade unions, immigrants, governments, foreigners or whichever group the political culture of the moment identifies as responsible. Some of these accusations may contain elements of truth, others may be fantasies and many are complicated mixtures of legitimate grievance and political opportunism.
The deeper danger arises when millions of individual disappointments crystallise into a general conviction that the economic system is rigged. A person who can no longer afford a restaurant does not necessarily become politically radical. A person who concludes that he works hard, obeys the rules, earns more in nominal terms than his parents did and nevertheless cannot afford the house they bought at his age may begin asking more fundamental questions about the social contract.
The limits of government
Governments confronting cost-of-living crises face an unpleasant paradox. The obvious response to hardship is to give people more money, but if inflation reflects excessive demand relative to available supply then distributing additional purchasing power may intensify the underlying problem. The compassionate response in the short term can therefore conflict with the requirements of stabilisation over the longer term.
The alternative can be equally painful. Higher interest rates reduce borrowing and spending, weaken demand and discourage inflationary expectations from becoming entrenched, but they do so partly by imposing financial pressure upon households and businesses. Monetary tightening is not an antiseptic technical procedure. It works through mortgages, investment decisions, employment, consumption and ultimately the daily lives of ordinary people.
Governments can nevertheless mitigate the distributional consequences through targeted assistance, improved housing supply, investment in infrastructure and energy security, sensible competition policy and measures designed to increase productivity. What governments cannot sustainably do is legislate society into prosperity by fixing every price. Price controls may sometimes be justified during emergencies, but if the underlying shortage remains then the problem tends to reappear through queues, rationing, black markets, declining quality or reduced supply.
The only durable escape
Ultimately there is only one durable way for societies to become materially richer: they must produce more value for each hour of human effort. This is the prosaic concept economists call productivity, but behind that technical word lies almost the entire history of modern prosperity. Mechanisation, electricity, modern agriculture, mass production, computers and global trade allowed societies to produce vastly more from finite quantities of human labour.
Borrowing can transfer consumption from the future to the present, taxation can transfer resources between citizens and monetary expansion can alter nominal quantities. Welfare programmes can protect vulnerable people and may be morally or politically indispensable. None of these measures, however, substitutes indefinitely for increasing the quantity or quality of goods and services an economy can produce.
Artificial intelligence may prove enormously important in this respect. Automation, robotics, improved energy technologies, biotechnology and computational advances could generate another substantial productivity revolution, potentially making societies far wealthier than they are today. Yet productivity improvements create distributional questions of their own, because a society can become richer in aggregate while substantial sections of its population become poorer if the gains accrue overwhelmingly to owners of capital or scarce assets.
The question is therefore not merely how much wealth an economy produces. It is whether ordinary people can afford to live within the society that produces it. A civilisation in which aggregate output reaches unprecedented heights while teachers, nurses and young professionals cannot afford housing near their workplaces cannot regard the productivity statistics as the complete measure of its economic success.
The price of civilisation
The history of cost-of-living crises ultimately teaches humility. We imagine that modern economics has carried us far from Roman grain distributions and European bread riots, and in many respects it has. Central banks employ armies of economists, governments possess sophisticated fiscal machinery, international financial institutions maintain enormous databases and monetary policy committees debate movements of fractions of a percentage point.
Yet the fundamental political questions remain surprisingly ancient. People need to know whether they can afford food and shelter, heat their homes, raise children, preserve their savings and expect tomorrow to be better than today. When enough people begin answering those questions negatively, economic statistics become political facts and confidence in institutions begins to erode.
This is why cost-of-living crises matter more than the phrase sometimes suggests. They translate vast abstractions — wars, monetary policy, commodity markets, fiscal deficits, productivity, supply chains and interest rates — into the intimate arithmetic of everyday existence. The great inflationary episodes of history differ enormously in their causes and severity, and ancient grain shortages, Weimar hyperinflation, the oil shocks of the 1970s and the disruptions of the 2020s should not be carelessly equated. Nevertheless they all reveal the fragility of the bargain upon which monetary societies depend.
Money is ultimately a promise. A salary promises that participation in economic life will provide a tolerable existence, savings promise that foregoing consumption today will permit consumption tomorrow and the currency itself promises that today’s labour can be exchanged for future necessities. When the cost of living rises faster than people’s ability to meet it, those promises begin to weaken.
That is the point at which a cost-of-living crisis ceases to be merely a dispute about inflation rates. It becomes a crisis of confidence in the social order, because citizens begin to suspect that the bargain connecting work, prudence and prosperity no longer functions as they were taught that it should. History suggests that governments neglect that suspicion at their peril.
