Rising prices bite first on those with least slack in their budgets.
Initially, many people will cope because they started out with income well in excess of essential expenditure and/or they have savings. So they can ride it out.
But as prices continue to rise (ahead of earnings), increasing numbers of people will tip over from having slack to not having slack to having to delve into savings to not having any savings left to being in debt. The longer it goes on, the more people will tip into crisis.
We are currently insulated from energy price rises through a combination of lucky choices about when to fix tariffs, driving an EV and having installed solar panels and a battery. But fixed tariffs will end, so eventually it will affect us - our electricity bill on the EV rates now in force will be double what we are currently paying, I’m trying to decide whether to fix on those rates now, 3 months ahead of my tariff ending, to ward off possible further rises if I wait till the end date. Plus, high fuel prices have to be covered in the price of everything else. Just bought milk at the supermarket - £1.45 for 4 pints, I’m sure that not so long ago it was £1.10.
35p isn’t going to break the bank, but if those percentage increases happen across more and more items, then sooner or later it will make a difference. So, while we are a long way away from being in crisis, I am noticing bills rising, and taking steps to adjust our spending accordingly.