Inflation increased by four per cent in the year to December 2023 – the first rate increase since February last year.

Chancellor Jeremy Hunt said: “Inflation never falls in a perfect straight line, but the plan is working; we have made huge progress in bringing inflation down from 11 per cent, and the Bank of England forecast that it will fall to around 2 per cent in a matter of months.”

Alastair Douglas, CEO of TotallyMoney said while inflation may be “far below” the 11 per cent peak seen in late 2022, the impact “will be felt for years to come”.

He added: “The cost of living is now considerably higher than it was, and the poorest households have been hit the hardest.

“Savings have been spent, and the government is barely supporting those it’s supposed to serve. For 11 million people, borrowing is now the only option — but many mainstream lenders are choosing not to lend to those who need it the most.

“Unregulated borrowing is soaring, meaning many are turning to buy now pay later, payday loans and illegal money lenders — falling off the radar and papering over the cracks of what in reality is a financial crisis.

“So while the headline numbers may say inflation is low, or unemployment is steady, the reality is that millions of people are struggling to keep up, more than half a million UK businesses are in significant financial distress, and nobody is receiving the levels of support they need to survive.”