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The cost of living crisis will deepen next year as people continue to be hit with falling pay, higher taxes and soaring bills, a think tank has warned.
Households face a cost of living “groundhog year” with disposable incomes plummeting even further than in 2022 and living standards getting “far worse” before they improve, according to the Resolution Foundation.
This is due to the continued shrinking of pay packets in real terms, with wages remaining well below current levels of inflation well into 2024.
Although inflation looks set to have peaked, this does not equal lower prices, just smaller price rises, meaning families still face sky-high costs.
Resolution Foundation chief executive Torsten Bell said: “From a cost of living perspective, 2022 was a truly horrendous year – far worse than any year in the pandemic or financial crisis.
“2023 should see the back of double-digit inflation, but it looks set to be a groundhog year for many families whose incomes look set to fall by just as much as they did in 2022.”
Mr Bell said many families will be helped by benefits and the National Living Wage rising, both by around 10% next April.
But he said this will be “swamped by shrinking pay packets, a record £900 rise in energy bills, tax bills for the typical household rising by £1,000, and millions seeing four digit increases in their mortgage bills”.
“For families’ living standards, things will get far worse in 2023 before they start to get better.”
This year saw the biggest annual fall in disposable income in a century as well as a collapse in living standards.
Surging energy prices have been the main driver of the cost of living crisis – mostly a consequence of Russia’s invasion of Ukraine in February that sent the price of many…
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