The Resolution Foundation, an independent think tank focused on improving living standards, in a new analysis warned that British household incomes are set to fall by 10%, around £3,000 for a typical household amid inflation fueled by high energy prices, Sky News reports.
According to the report, under present projections, real-terms pay in 2027 is likely to be lower than it was 20 years ago.
"We're all worried about the sky high rises in the costs of living but it is not hitting us all equally. For many families we work with, there are no cost-cutting measures, there is simply nothing left to cut back on,” Fiona King, the charity's policy manager, said as quoted by the Sky News.
With the current cost of living crisis being felt the strongest by low income households, absolute poverty levels are set to rise sharply too, the report notes.
This comes as UK energy regulator Ofgem announced on Friday a decision to increase the energy price cap by 80%, to 3,549 pounds per year, starting October 1 due to soaring global energy prices.
After Russia launched its military operation in Ukraine in February 2022 and Brussels imposed several sanctions packages against Moscow, the energy situation in Europe deteriorated considerably, with inflation in the UK reaching its highest since March 1982. The rising cost of living has hit millions of households, prompting workers to go on strike.