British families should prepare for their incomes to fall by 3% in 2022/23 and 4% in 2023/24, a new report from think tank Resolution Foundation found.
“2022 was indeed a truly horrendous year for household living standards,” the report said, “real disposable incomes fell by the biggest single-year fall in a century.”
Yet, real wages will not return to 2022 levels until 2027, with typical incomes still expected to be behind pre-pandemic levels in 2028.
This year should see inflation ease, driven by global energy and goods prices falling, the researchers added.
“But offsetting this will be a rise in energy bills… as the price cap is lifted, and government support is scaled back” Resolution Foundation stated.
Annual energy costs are expected to rise from £2,000 to £2,850 in 2023/24, the report revealed.
The cost-of-living crisis will also be driven by “real wages remaining below current levels well into 2024” and “tax rises amounting to £700…and around 2 million households moving onto more expensive mortgages.” the policy institute said.
Low-income homes will therefore miss paying key bills and struggle to afford essentials like food, Resolution Foundation believes.
The government are offering large interventions for low-income households including a ten percent rise to benefits and pensions due in April.
“But much of this relative protection of low-income households disappears when we consider that the items rising fastest in price make up more of the budgets of low-income households.
“The fact that wholesale gas prices have now fallen, while retail energy prices households face are set to rise, means there is likely to be a renewed debate about the level of the Energy Price Guarantee and whether it should rise above its current £2,500 level in April.” Resolution Foundation concluded.