As the UK weathers a credit crisis, inflation has risen and is threatening to hit Brits hard.
The price of oil has hit record levels, gas and electricity, petrol and food prices are soaring, and, according to moneysupermarket.com the majority of Brits believe they will not be able to cope if prices continue to rise.
A new survey by moneysupermarket.com found that two thirds of its users fear financial disaster at the hands of price hikes. Head of debt at moneysupermarket.com, Tim Moss said: "Brits are being stretched to breaking point. Rising fuel prices are a massive issue right now, in much the same way as they were during the fuel protests of eight years ago.
"People are really starting to suffer and need help urgently. People should start by gathering their paperwork and working out the true scale of their problems. From there they must prioritise bills and pay essentials such as mortgage or rent and utility bills first. Non-essential items such as magazine subscriptions and pay-TV might have to be sacrificed." Mr Moss advised.
It is not just fuel bills
that are starting to affect Brits, food prices are creeping up at a record rate and experts have warned that they could remain high for the foreseeable future. The Chancellor, Alistair Darling met with Britain's biggest supermarkets yesterday to discuss the threat that food prices pose for the UK economy.
The latest Food Outlook report from the Food and Agriculture Organisation (FAO) said: "Prices are unlikely to return to the low levels of previous years due to a host of reasons, including the escalated cost of inputs. Moreover, a number of demand factors such as the need to replenish stocks and expected increases in utilisation are keeping prices high despite a favourable global production outlook."
As the price of essential items soars, the Office for National Statistics (ONS) has found that retail sales fell for a second month by 0.2 per cent in April, indicating that Brits are cutting back on non-essential spending.
New research from Alliance & Leicester supports these statistics, as it has found that 76 per cent of those questioned are preparing to tighten their purse strings in the coming months.
Manager of current accounts
at Alliance & Leicester, Emma Walkley, said: "It seems many of us are feeling the pinch and looking for ways to cut back. The good news is that people are taking action now and looking at ways of making their money go further rather than burying their heads in the sand."