UK Inflation Jumps as 'Cost of Living Crisis' Hangs Over Economic Recovery

Inflation rose sharply in June as the squeeze on family finances refuses to abate despite the strengthening UK economic recovery.

The Office for National Statistics (ONS) said its consumer price index (CPI) grew by 1.9% in June, an acceleration on May's 1.5%.

But pay is only growing by 0.9% on average in the UK, amounting to a real-terms cut in incomes as prices rise faster than wages.

And many of those who receive welfare payments have had their benefits rises capped at 1% a year under the government's austerity drive to cut public spending, meaning a real-terms cut for them too.

"The largest contributions to the rise in the rate came from the clothing, food & non-alcoholic drinks and air transport sectors," said the ONS.

Britain's economy is set to grow by 3% in 2014, according to Bank of England forecasts, but many are still struggling in what the opposition Labour party has dubbed a "cost of living crisis".

Benefits cuts, weak wages growth and higher prices are biting down hard on many households with low and middle incomes.

The government has lifted the personal allowance threshold – the point at which an individual pays tax on their earnings – to £10,000 to allow workers to keep more of the money they make.

Another 600,000 households in the UK slipped below the poverty line during the 2012/13 year amid higher rents and tumbling wages.

The Department for Work and Pensions (DWP) said in a report that there were 14.6 million households in absolute income poverty during the year, having risen from 14 million in 2011/12.