Why the average British worker will be £1,000 worse off this year

Rishi Sunak has been urged to make more effort to protect workers amid warnings the typical earner will be hundreds of pounds worse off due to the escalating cost-of-living crisis.

The Resolution Foundation has warned rising inflation is driving a 4% fall in real incomes, worth £1,000 for a typical earner, making it the sharpest living standards squeeze since the 1970s.

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Inflation is currently at 5.5% - a 30-year high - and is forecast to hit more than 8% in April. Items most affected by soaring inflation are housing bills, transport, clothing, housing goods, and food.

James Smith, research director at the Resolution Foundation, warned that Brits on middle incomes faced a grim year as prices for essentials continue to rise.

"We’re expecting the high inflation this year to be a really big drag on household spending," he said.

"It's very likely we'll see more inflation from [energy bills], and really a sort of key thing in all this is that inflation really drives the spending power, real incomes, down across the board," he added.

"So we’re expecting the high inflation this year to be a really big drag on household spending.

"And we put out the living standards outlook last week that basically showed that we’re expecting something like the weakest year in for median incomes in about 50 years.”

The stark outlook joins a growing chorus of experts on the issue.

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On Friday Paul Johnson, director at the Institute for Fiscal Studies (IFS), said a failure by chancellor Rishi Sunak to introduce urgent economic interventions in his Spring Statement to protect households could have a catastrophic impact.

"If he doesn’t [intervene] then many on moderate incomes will face the biggest hit to their living standards since at least the financial crisis," said Johnson.

"If he does, then there will be another big hit to the public finances."

Normally, the Spring Statement - also known as the "mini-budget" - is not a moment where a chancellor would make big spending announcements, but pressure is growing for action amid the growing cost-of-living crisis.

The TUC have joined called on the government to do more to help workers.

“Everyone who works for a living ought to earn enough to get by," said TUC general secretary, Frances O’Grady on Saturday.

“But years of wage stagnation, and cuts to social security, have left millions badly exposed to sky-high bills.

“With households across Britain pushed to the brink, the government must do far more to help workers with crippling energy costs."

Labour has pinned the "devastating" at the door of successive Conservative governments.".

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"Twelve years of Tory economic incompetence has given working people, families and pensioners a devastating cost of living crisis with energy bills so unaffordable, tax rises so punishing, and Universal Credit cuts so severe that people are faced with impossible choices over heating and eating," shadow work and pensions secretary Jonathan Ashworth told Yahoo News UK.

"Rishi Sunak should follow Labour's lead and halt the coming [National Insurance contributions] rises and adopt our costed plan to reduce heating bills for households who need help."

Watch: Cost of living crisis will be ‘fatal’ for some children in poverty - Jack Monroe