A third said they had already deteriorated over the past three months, insurer LV= found in a poll. As living costs surge, nearly half (48 percent) of the 4,000 people questioned said their monthly living expenses had increased.

Clive Bolton, managing director of protection, savings and retirement at LV=, said: “Inflation is becoming more of a problem for many people who say their outgoings have increased, particularly those who are retired.

“Rising prices coupled with poor returns on deposit accounts will dismay pensioners whose only or main source of income is the state pension.

“Many will be financially squeezed as the cost of essential items like home heating rise. However, the economy remains relatively strong.”