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“It is the inflation people cannot avoid that is really hurting. Fuel prices are at record highs while food prices have seen the biggest increase in over a decade. And that’s before we even get to gas and electricity prices. The impact is already being felt, with 60% of adults saying they’ve been forced to cut back on discretionary spending and 21% borrowing more than they did this time last year.

“Inflation of almost 10% will continue to heap pressure on employers to hike pay for armies of people who have never experienced anything but rock bottom rates and gentle price rises. 

“This could pour more fuel on the fire but it’s all they can do to retain staff amid a labour shortage in many industries, as workers are pummelled by worsening affordability issues. That applies to the public as much as the private sector, with the cost living crisis exacerbating the drums of war that could see strikes grip the country for months.

“Many households are now having to make difficult choices every day. For some it will be a case of heating or eating later in the year. The fuel crisis is already making life miserable for commuters, 70% of whom go by car, and that figure will have been higher due to strikes this week.

“Borrowing costs pose a major long-term risk. Not only do mortgage payments represent a huge and unavoidable expense, homeowners fearful of further rate rises will naturally look to lock in the best deal they can now as rates climb in concert with Bank of England interest rates. Anyone approaching the end of a fixed-term deal should be scanning the market to see if it might be worth paying the Early Repayment Charge to switch sooner.

“This will have an impact on consumer confidence as households prioritise home loans over non-essential spending, which is why businesses are on high alert too.

“And that comes at a time households are cutting back on non-essential spending and factory prices for goods are soaring — the combination of less through the tills at the same time as the price of goods, the cost of fuelling delivery vans and borrowing costs are rising could prove fatal for dozens if not hundreds of businesses.”

press@money.co.uk