British households face the worst squeeze on record, as chancellor Rishi Sunak warned that even middle earners will “feel the pinch” in the months ahead.
“The price rise is so significant that it’s not just those families who are on benefits that are going to feel the pinch, it’s actually middle-income families as well. Families that are working hard, they’re not on welfare; this will be a significant increase for them,” Mr Sunak told reporters.
The Bank of England Andrew Bailey said inflation was not expected to return to normal levels until early 2024, with pay rise struggling to keep up.
Bailey told BBC Radio’s Today programme: “It is going to be a difficult period ahead, I readily admit, because we all get we are already seeing and we’re going to see a reduction in real income.
With workers’ pay rises averaging below 5 per cent and taxes set to rise in April too, it means households here face the biggest fall in their real incomes since comparable records began 30 years ago.
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