UK households are likely to be hit next year amid rising tax and energy bills, along with stalling wages.
The Resolution Foundation has said that next year could be “year of the squeeze”, and higher energy bills could cost households £1,200.
The report said: “The months ahead will not be easy for households who see their wages fall back as energy bills and taxes rise. As Omicron hopefully fades in the early months of 2022, we will come to realise the scale of the challenge posed to household finances.”
UK inflation hit highs in 2021 and is likely to grow next year.
“2022 will begin with Omicron at the forefront of everyone’s minds. But while the economic impact of this new wave is uncertain, it should at least be short-lived. Instead, 2022 will be defined as the ‘year of the squeeze’,” said Torsten Bell, chief executive of the Resolution Foundation.
“The overall picture is likely to be one of prices surging and pay packets stagnating. In fact, real wages have already started falling, and are set to go into next Christmas barely higher than they are now.”