Around 1.3 million people will not be able to afford basic necessities including groceries from April, the Resolution Foundation has estimated.
The warning comes after the Chancellor announced the Spring Statement on 23 March, which has been heavily criticised by trade unions and the Opposition for failing to address soaring energy bills and refusing to increase benefits in line with inflation.
According to the think tank, the number of people unable to afford basic necessities will eventually rise to 12.5 million, which will be the first time Britain has seen such an increase outside of a recession.
READ MORE: Spring statement: food inflation up by 5.1%
“Britain is on course for the biggest of cost of living squeeze over the coming year since the 1970s. Normally, the social security system protects families from shocks like these,” Resolution Foundation chief economist Mike Brewer told Grocery Gazette.
“…But this time it risks tightening the squeeze as benefits like Universal Credit and the State Pension due to rise by just 3.1 per cent in April, at a time when inflation is over eight per cent.”
Ahead of the Spring Statement, the Resolution Foundation urged the Chancellor to raise benefits by an “extra five percentage points this coming year, and offset it with lower increases when inflation has come down.” However, no changes to benefits were announced.
On top of this, the think tank’s chief executive Torsten Bell explained that low-income families will have to “cut essentials” as they “don’t have lots of luxury spending to go in the first place.”
Echoing the sentiment, Labour’s Shadow Chancellor Rachel Reeves said Rishi Sunak had failed to understand the scale and severity of the cost-of-living crisis.
The news comes as the OBR’s latest forecast revealed inflation rates have hit 6.2% and is set to reach a 40 year high of 8.7% later this year.
Click here to sign up to Grocery Gazette’s free daily email newsletter
