INFLATION is set to cause a £300 a year squeeze on household finances causing inequality on a scale not seen since the days of Margaret Thatcher, a think tank warned yesterday.

Ahead of the latest Office for National Statistics figures on the rate of inflation, the Resolution Foundation has predicted that households could see “the deepest freeze yet” on benefits.

For decades, working-age benefits have gone up every April in line with the rate of inflation, but the current spike in inflation is causing a pay squeeze, with a freeze on benefits a second hit for many, the foundation says.