Loud music, including the songs 9 To 5, I Need A Dollar and Money, Money, Money, was played through speakers, as people sang and danced along.
British Prime Minister Boris Johnson has been criticised for being slow to respond to the cost-of-living crisis.
Inflation in Britain and across Europe was already rising at the start of the year when Russia’s war in Ukraine compounded matters by affecting supplies of energy and food staples such as wheat.
Protesters on Saturday's march demanded that the government does more to help people faced with bills and other expenses that are rising more quickly than their wages.
Banners reading ‘Cut war not welfare’ and ‘End fuel poverty, insulate homes now’ were carried by demonstrators. Others read ‘Nurses not nukes’ and ‘Don't get angry, get active’.
Ben Robinson, 25, who works for a housing charity in Brixton, south London, and Frankie Brown, 24, a teacher, were at the protest.
“Every day I have got kids in my class who are going home to homes where they don't have enough to eat," Ms Brown said.
Mr Robinson said: “We've got residents who are coming into our offices who are choosing between feeding their own kids, not themselves, their own kids, and paying rent and heating, and that is just not a choice that anyone should have to face in the fourth-biggest economy in the world.”
He added: “I don't think there's enough recognition in the government how bad things are going to be and really are for people, real people, who don't have enough money.”
In speeches in Parliament Square, union leaders called for higher wages, increased taxes for the rich, better working conditions — and offered support for the proposed rail and tube strikes next week.
Frances O'Grady, general secretary of the Trades Union Congress, was applauded and cheered as she criticised the prime minister and his transport secretary Grant Shapps.
“I have seen [Mr Shapps] has threatened rail workers that they will strike themselves out of a job," she said.
“Well, you are wrong, Mr Shapps. If you keep stirring, come the next [general] election, you will be out of a job.
“Let me say this to Boris Johnson: don't you dare shift the blame for inflation on to working people.
“Don't you dare, not after a decade of austerity, privatisation and pay cuts. Don't you dare tell working families we have to put up with more pain.
“What about bankers' bonuses? What about the boardroom raking it in? What about corporate profits? It is time to raise taxes on wealth, not workers.”
The TUC says its research suggests workers have lost almost £20,000 ($24,000) since 2008 because salaries have not kept pace with inflation.