Housing is the most critical. Average mortgage payments have risen from £714 a month in August 2021 to £911, a rise of more than one-quarter.
Rents are also rising fast with the typical payment by tenants up almost one-fifth to an average of £1,254 per month, according to the ONS.
Offering hope on housing costs before the election requires an interest rate cut from the Bank of England. This would lead to lower mortgage rates.
Since the Old Lady of Threadneedle Street was given operational independence in 1997, decisions on borrowing costs have been out of the Government’s hands, precisely because it was considered dangerous to have politically motivated rate cuts before elections.
Now that inflation has dropped almost to the Bank’s 2pc target, and with further falls expected, June’s policy meeting might seem the perfect time to cut the base rate from its 16-year high of 5.25pc.
It would certainly reinforce the Prime Minister’s case that the crisis is over and things are heading in the right direction.
However, there is no guarantee that the Bank’s policymakers, led by Governor Andrew Bailey, will cut borrowing costs in time for the election.
They want to see inflationary pressures in the domestic economy back under control and, while the headline rate is encouraging, there are still worrying signs beneath the surface.
Rate-setters are particularly worried about services price inflation, which is heavily dependent on wages. This is still running at 5.9pc, a dangerously high rate.
Officials may also be wary of appearing political. Since it was made independent in 1997, the Bank has never changed interest rates close to a general election.
Sunak’s argument to the public is that all of this is a minor wrinkle. His economic plan is working and the dividend is in the post.
“Inflation is back to normal,” the Prime Minister said on the steps of Downing Street. “This means that the pressure on prices will ease and mortgage rates will come down. This is proof that the plan and priorities I set out are working.”
Bill Clinton’s election guru James Carville famously summed up their successful campaign strategy as “It’s the economy stupid”. Sunak is fighting a similar battle, and hoping for similar results.
Yet with the benefits of a rebounding economy and falling inflation not yet totally apparent in people’s pockets, the Prime Minister’s strategy is a risky one.