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Inflation outpaces wage increases

More people in the UK could be turning to personal loans to fund everyday expenses as new research has revealed that the cost of living has surged nine per cent in the last year.

According to uSwitch the 2008 average wage has risen by 3.4 per cent (£533), but cost of living has gone up by nine per cent (£1,783), leaving a significant deficit for many.

The company says that with millions of families already facing an increase of £148 a month in essential living costs, households will be left £21 billion out of pocket.

It adds that nine million people will receive no pay rise at all this year and a further 13 million will receive a pay rise below the Retail Price Index (RPI) of 4.2 per cent and over five million people will get a pay rise falling short of the Consumer Price Index (CPI) of 2.2 per cent.

The study, based on data from YouGov online omnibus research,

Ann Robinson, director of consumer policy at uSwitch, said: "This is crunch time for UK households as we face up to a downturn in the economy, the news of below-inflation pay rises and the reality of having less money in our pockets.

"We are working harder, but are certainly not getting any wealthier. Hikes in taxes, the cost of food, utility bills and social contributions over the last decade have outpaced the overall rise in income levels, to push disposable incomes in the UK to their lowest level in a over a decade. Today's news indicates that things could get a lot worse before they get better."

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