UK inflation has now reached a 30-year high of 5.4 percent amid fears the worst is yet to come, deepening the cost of living crisis for millions of poorer households.

This will place pressure on the Bank of England to raise interest rates in a bid to tame inflation, as well as pressure on the Conservative government to find extra ways to help low income families.

Energy costs are one of the major contributors along with food, furniture, clothes and restaurant prices all adding to the fiscal pressure.

There are concerns inflation could peak at around 7 percent by April as the cap on domestic gas and electricity prices is lifted and a new national insurance tax increase kicks in to help pay for COVID-19 business relief policies.

Pay has also fallen in real terms for the first time in more than a year. The latest figures from the Office for National Statistics, which cover up to November 2021, show that average earnings grew by 3.5 percent that month but with inflation at 5.1 percent, there was an effective loss of income of 1.6 percent.

This loss of purchasing power looks set to grow in the coming months.

There have been steady gains in employment as firms continue to hire, with the unemployment figure falling to 4.1percent, nearing its pre-COVID-19 levels.

The Bank of England Monetary Policy Committee, which raised interest rates from 0.1 to 0.25 percent in December, is due to meet in early February and could push interest rates up again to 0.5 percent. Further rises could also take place later in the year as the Bank struggles to keep inflation down to 2 percent.

Rising inflation is yet another headache for Prime Minister Boris Johnson as he struggles to survive following the scandals over parties and drinks at his official residence at 10 Downing Street while the country was in strict lockdown.

The government says it has already committed some $16 billion over two years to help families cope. Now the finance minister, Chancellor Rishi Sunak, is under growing pressure to come up with further relief measures for low-income families.