Inflation is down, the economy is growing. But will cost-of-living crisis sink Sunak in the U.K. election?

After 14years of Conservative rule, British voters may just belooking for a change in leadership when they go to the polls on July 4,regardless of the issues at play.

Earlier this week, British Prime Minister Rishi Sunak called an election hoping, perhaps, to capitalize on some positive recenteconomic news, considering his Conservative Party's standing in recent polls. Yet most forecastKeir Starmer's Labour Party as favoured to win.

Key issues of the six-week campaign will likely include the millions who continue to lingeron waiting lists for service from the government's strained health-care system, the National Health Service. Immigration, too, and the number ofmigrants arriving in Britain illegally,will be an important issue, especiallytoConservative voters.

But the cost-of-living crisis may be thedominant issue during thethe six-week campaign.

"Both sides will talk a lot about the economy," said AnandMenon, professor of European politics and foreign affairs at King's College London. "At least so far and it might change with [their party platforms] no one really is planning to do very much about it."

Over the past couple of years, British voters have suffered through a cost-of-living crisis, in whichthe prices of essential goods rosehigher than the average worker'swages.

Living standards tooka significant hitand willbe lower when Britain elects a new governmentthan at the time of the last election in 2019.

The British economy fell into recession at the end of 2023 for the first time since the onset of the COVID-19 pandemic. A year before, at the end of 2022,inflation jumped to a 41-year high,hitting just over 11 per cent. Russia's war with Ukraine also led to energy prices shooting up, impacting many voters because of Britain's reliance on gas.

"The energy price spike was very big hereand quite long-lasting because there was a very big government support scheme, and then that ended," said Robert Ford, political science professor at the University of Manchester.

"Althoughthe world market prices came down, they didn't come down in quite the same wayfor voters because theygot kind of cushioned from the worst ofthe spike," he said.

"And then when that support disappeared, basically the pricesstayed high."

Food prices spike

Food prices also spiked in the U.K. For example, 500 millilitresto onelitre of olive oil, priced on average at $6.46 Cdn in April 2021, cost $14.72 Cdnin April 2024,a 128 per cent change, according to the U.K'sOffice for National Statistics.

Other food items sawsignificantincreases, too, including lettuce (63 per cent) and beef burgers (55 per cent).

"That really hit people hard," Ford said.

Voters were also hit with higher interest rates, in an attempt to cool the economy and bring down inflation. Like the Bank of Canadaand other central banks around the world, the Bank of Englandraised interest rates aggressively. Rates increased 14 times, from 0.1 per centin December 2021 to 5.25 per centin August 2023.

"A lot of people in Britain are on relatively short-term fixed mortgages," Ford said. "So there's a kind of rolling impact of the interest rate rises in the last couple of years, still hitting hundreds of thousands of peopleevery single month, as their mortgages roll on to a higher rate."

That has also spilled over into rents, he said, which have gone through the roof.

According to a recent survey conducted by theFinancial Conduct Authority, the country'sfinancial regulator, more than 7.4 million people in the U.K. struggled to pay a bill or a credit repayment in January. It estimatedthat5.5 millionpeople fell behind ormissed a bill or credit payment in the six months to January 2024.

However, Sunak can point to some recent positive economic trends: That 7.4 million figure is down from 10.9 million in January 2023.

The Office for National Statistics reported earlier this month that the British economygrew by 0.6 per centin the first quarter from the previous three-month period. The increase was higher than the 0.4 per centpredicted by economists and the strongest since the fourth quarter of 2021, when the economy was rebounding following the sharp contraction during the pandemic.

Inflation falls to 2.3%

As well, the Office forNational Statistics said this week that the U.K.'sinflation rate had fallento 2.3 per cent, the lowest rate in three years.

"This morning, it was confirmed that inflation is back to normal," Sunak said when announcing the election date. "This means the pressure on prices will ease and mortgage rates will come down."

Also, wages have been rising at a faster pace than inflation, putting more cash in people's pockets in real terms, while energy prices stabilize, and interest rates haven't been raised in nearly a year.

Yet the economy, while growing, will grow the slowest among the G7 countries, according to the Organization for Economic Co-operation and Development, which recently forecast growth in 2025 at one per cent.

Andmany Britons are still struggling. Inflation, for example, may be down, but prices on items are still more expensive than they were a few years ago.

"Bringing inflation down doesn'tmitigate the impact of having hadthe inflation in the first place," Menonof King's College London said.

"So everything still is more expensive," he said. "Yes, salaries have gone up,but still people notice, don't they, when prices are higher than they were."

The University of Manchester's Ford noted that this is the firstgovernment ever in modern post-war British history where, over the course of the full parliamentary term, real take-home incomes have gone down. And according to some reports,people's living standards have gotten worse.

'Are you better off?'

Althoughglobal forces have certainly played a role in Britain's economic struggles, it would be a challenge for any government to convince voters that this is not its fault or that it shouldn't be punished for this, he said.

"Because it's the [former U.S. president] Ronald Reagan question:'Are you better off than you were four years ago?' And an awful lot of people will say no," Ford said.

"That'swhy the fall in the inflation rate doesn't matter.Theinflation rate is eagerly watched by everyone in the business community, in the media community. It does not accord at all with people's lived experience."