Britain’s poorest have seen a “staggering” 15% decline in their incomes in the past year, according to a stark report, which shows official figures charting the level of inflation have under-estimated the drop in living standards, says the Huffington Post.

The New Economics Foundation (NEF) said that the richest 10% in British society have, by contrast, enjoyed “steady growth” in their earnings once more.

This comes as a separate study found that the average British worker is almost £5,000 a year worse off because wages have failed to keep pace with inflation since 2008.

The NEF think-tank dismissed the official Consumer Prices Index for inflation, which gives a sense of the cost of living, as “fundamentally flawed” as there is no such thing as an ‘average household’. It also launched the so-called Real Britain Index to provide a more accurate measure of price rises.

The suggestion that the official figures are giving a rosy picture of how the poorest Britons are coping will jar with the coalition’s message, as George Osborne seized on the recent five-year inflation low of 1.2% as a “dose of good news” and proof that his economic strategy was working.

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