Households face a ‘serious challenge’ after inflation hit its highest level in nearly four years, experts have warned.
The post-Brexit vote fall in the pound, coupled with electricity price hikes and rising air fares, have pushed up costs to consumers.
The rise means inflation is now outstripping the growth in wages.
Kay Daniel Neufeld, economist at the Centre for Economics and Business Research (Cebr), said the jump in the cost of living poses "a serious challenge to UK households".
He added: "Wage data are due later this week and are expected to show that real wage growth has turned negative in the first months of 2017.
"Consumer spending has already slowed, as evidenced by weak retail sales growth in the first quarter of this year, and is expected to suffer further from low wage growth and higher inflation.
"This means that the UK economy is losing considerable momentum."
Official figures show that the Consumer Price Index (CPI) measure of inflation rose to 2.7 per cent in April, a level not seen since September 2013.
Wages grew by just 2.3 per cent in the year to February.
The Bank of England predicts that inflation will peak at 3 per cent later this year, in the wake of the pound's slump following the Brexit vote.
Unions called for an end to the 1 per cent pay rise cap for public sector workers.
Tim Roache, the General Secretary of the GMB, said that te figures showed that the cap was “completely untenable”.
Former shadow chancellor Chris Leslie said that the figures showed that Brexit was already "making real people poorer", two years before the UK leaves the European Union.
"The post-referendum collapse in the value of the pound has pushed up the cost of imports, meaning food, clothes, petrol and other staples are becoming ever more expensive," he said.
“Leave campaigners promised us we would not be any worse off if we voted to leave. They were wrong, as the rise in prices outstrips wage growth and leaves working families feeling the pinch.
“This demonstrates the dangers in the Government’s hard Brexit approach. They have to negotiate a deal that gives us the ‘exact same benefits’ as Single Market membership, as they promised, to stop prices rising further and our economy suffering real damage.”
The Liberal Democrat Shadow Business Secretary Susan Kramer agreed.
"These worrying levels of inflation show the Brexit squeeze is hitting shopping baskets across the country," she said.
"This is the reality of Theresa May and Nigel Farage's extreme Brexit agenda: higher prices in the shops, the cost of holidays going up and less money for our schools and NHS."
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