Hard-up households' finances are being squeezed even further, according to May's Household Finances Index from Markit.
The index signalled the sharpest deterioration in family finances since January. Around 35 per cent of households reported that their finances worsened in May, compared to 8 per cent noting an improvement.
Mortgage holders were hit hardest after several lenders increased standard variable rates last month. Some 45 per cent noted a decline, compared to 7 per cent an improvement.
Tim Moore, senior economist at Markit, said: "The UK economy continues to stutter through the second quarter, with respondents signalling an overall stagnation of workplace activity. The view from the coalface suggested that weakness in manufacturing and retail offset modest growth across service and construction industries."