Cost of living 'over £700 a year more than 2010'

According to retirement company MGM Advantage, the average person in the UK needs to spend an extra £736 a year to maintain the same standard of living as one year ago. A typical UK household needs an extra £1,768 compared with last year.

Collectively, UK households need to spend an extra £46 billion to enjoy the same standards of living as this time last year.

Last month, inflation reached a three-year high of 5.2%, well above the Government target of 2% - reflecting the growing pressure on many households' finances.

The squeeze on incomes is affecting each generation differently. MGM Advantage reports that households where the main occupant is between 65 and 74 years old would need to find an additional £1,104. Older households need an additional £814 to maintain the same standard of living as one year ago.

Elsewhere, research has revealed that rental prices are soaring. The Findaproperty.com Rental Index indicates the average rental price reached a record high of £890 in the third quarter of this year - which is 4.6% higher than a year ago. This is partly because more people are looking for rented properties, meaning there are fewer available.

A spokesperson for debt management company Gregory Pennington commented: "These figures demonstrate how many households in the UK are struggling to maintain the same standard of living as one year ago. Most of us have had to cut back in one way or another, but some people may find themselves completely unable to keep up with their living costs.

"The rise in rental costs is an additional pressure on household purses and those with existing debt may struggle even more. Many households in the UK have some form of debt, which could become unmanageable when incomes are squeezed. We recommend that anyone struggling to repay debts seeks debt advice sooner rather than later."