The issue still seems to be ongoing.

I managed to fix it today by updating to the latest Cursor version, downgrading the Prettier VS Code extension to 11.0.2, and removing the following from settings.json:

"[typescript]": { "editor.defaultFormatter": "vscode.typescript-language-features" }

Links to comments that helped me to fix the issue:

https://forum.cursor.com/t/after-last-update-prettier-stoppe...

https://forum.cursor.com/t/after-last-update-prettier-stoppe...