Despite the fact that they are already “at financial breaking point”, UK households collectively need to come up with an extra £17.7bn a year in order to maintain the same standard of living they enjoyed 12 months ago.
Retirement income specialist MGM Advantage has found that each household will have to pay out an additional £678 a year to uphold living standards from just one year ago.
The high rate of inflation, which currently stands at 2.7%, has been blamed for the soaring cost of living.
Aston Goodey, distribution and marketing director at MGM Advantage, said: “Households are already at financial breaking point, but with inflation remaining stubbornly at 2.7% for four months in a row, people will continue to feel the strain from rising costs.”
Worn down by pay freezes and the rising cost of living, Brits are already scraping the bottom of the financial barrel. According to the Office for National Statistics (ONS), average earnings have dropped to levels seen in 2003.
Real earnings peaked in 2009, with the average wage at £12.25 per hour, but since then pay increases have been outstripped by inflation, which has pushed the average back down to where it was in 2003 at £11.21 per hour.
Leading think tank Resolution Foundation warned that the finances of millions of families may never recover from the impact of the economic downturn.
TUC General Secretary Frances O’Grady said: “There has been no let up in the financial pressures being faced by millions of ordinary families.
She added: “The cost of living is rising twice as fast as wages, and household budgets are still under huge strain.”