Cost of living squeeze now worst on record as incomes fall yet again

HOUSEHOLD incomes have suffered their longest decline on record as the cost of living squeeze intensifies, it emerged yesterday.

Real incomes dropped by 0.2 per cent in the first three months of this year, the Office for National Statistics (ONS) said.

It was the fourth quarter of income decline in a row and the longest continual fall since records began in 1955.

The ONS said the 1.5 per cent rise in average household incomes in cash terms was wiped out by a 1.7 per cent rise in inflation.

There were also signs the crunch was beginning to hit the property market last month as house price growth slowed.

Family budgets have been battered by issues including the war in Ukraine. But the ONS figures did not include the tax rise and energy price cap increase in April.

Myron Jobson, senior personal finance analyst at Interactive Investor, said: ‘UK household incomes are in the longest ever run of declines thanks to runaway inflation and the harsh reality is the worst is yet to come.’ He said many Britons are being forced to make ‘serious lifestyle changes’.

The pain is set to worsen in the coming months, with the Bank of England predicting inflation will hit 11 per cent before the end of the year, up from 9 per cent.

The boss of regulator Ofgem warned energy bills could rise by more than £800 to £2,800 a year when the price cap is reviewed in October. The record slide in household incomes is set to ratchet up pressure on Chancellor Rishi Sunak to help struggling households.

Meanwhile, house price growth slowed to 10.7 per cent in June from 11.2 per cent in May, building society Nationwide said, but the average cost of a home hit another record high of £271,613 last month.