FAMILIES are facing an “unprecedented erosion of household living standards” as a result of rapid inflation and no change in wages, says the York-based Joseph Rowntree Foundation in new research released today.

The cost of living has soared by 25 per cent in five years and it is becoming increasingly difficult for people to earn enough to meet their expectations, according to the foundation’s annual Minimum Income Standard update.

The report says a quarter of UK households fall short of the required income to meet minimum standards of living and someone on minimum wage, even working full-time, would fall thousands of pounds a year short.

A single person needs to earn £16,850 a year to reach an adequate standard of living, a working couple with two children need £19,400 each, and a lone parent must earn £25,600, according to the study. The equivalent figures for 2012 were £16,400, £18,400 and £23,900 respectively.

The figures have been driven up by the cost of essentials increasing dramatically over the past five years, the report said.

Donald Hirsch, author of the report, said: “From this April, for the first time since the 1930s, benefits are being cut in real terms by not being linked to inflation. This, combined with falling real wages, means that the next election is likely to be the first since 1931 when living standards are lower than at the last one.

“This year’s Minimum Income Standard (MIS) tells us working parents with children need to earn £19,400 each at a time when wages are flat. There is a growing gulf between public expectations of the living standard everyone should be able to afford and their ability to earn enough to achieve it.

“About a quarter of households in the UK fall short of the income required to reach an adequate standard of living – for them a 25 per cent increase in costs intensifies the everyday struggle to make ends meet.

“This year’s report demonstrates how the price of a basket of goods needed for an acceptable living standard has risen far faster than average inflation.

“This has combined with low pay increases to create a widening gap between income and needs.”

Child-care costs have risen more than twice as fast as inflation, at 37 per cent. Social housing rent has shot up by 26 per cent, food bills have soared by 24 per cent, energy costs by 39 per cent and public transport costs by 30 per cent.

Chris Cullwick, chairman of the York Food Bank Group and head of community engagement for the city’s churches, said: “We anticipated changes from April and that has happened. We helped our 1,000th person a few weeks ago, after we started in November.

“We have seen an increase in demand, which means we are setting up two more distribution centres in the city – at Tang Hall and at Clifton.”

Cuts to benefits and tax credits have exacerbated the problem over the past 12 months, the study said.

The coalition’s flagship policy of raising the personal tax allowance to £9,440 in April has helped, but is cancelled out by the cuts and the rising cost of essentials.

The freeze in child benefit, the decision to uprate tax credits by one per cent and the increase in the cost of essentials faster than inflation mean a working couple with two children will be £230 worse off a year; a working lone parent has £223 less disposable income and a single person is worse off by £49 a year.