A new report by Resolution Foundation has found that British families should be prepared for their incomes to drop by 3% in 2022/23, and 4% in 2023/24.
“2022 was a truly terrible year for household living standards,” said the report. “Real disposable incomes fell by their largest single-year drop in a century.”
However, real wages won’t return to 2022 levels before 2027. In 2028, typical incomes will still be below pre-pandemic levels.
According to researchers, inflation should ease this year due to falling global energy and goods costs.
Resolution Foundation stated that this would be offset by an increase in energy bills as government support is reduced and the price cap lifted.
According to the report, energy costs will rise annually from £2,000 to £2,850 by 2023/24.
According to the institute, “real wages will remain below current levels well into 2024” as well as “tax increases of £700…and approximately 2 million households shifting onto more expensive mortgages.”
Resolution Foundation believes that low-income households will be unable to pay key bills and have difficulty affording essentials such as food.
The government is offering large intervention for low-income households, including a ten per cent increase in benefits and pensions.
“But, much of this relative protection for low-income households vanishes when we consider the fact that the most expensive items make up more budgets of low income households.
“The fact that wholesale gas prices are falling while household energy prices are rising means that there will be a renewed debate over the Energy Price Guarantee level and whether it should increase above its current £2,500 level for April,” Resolution Foundation concluded.