Brits will be faced with a £2,000 hit each year with soaring inflation, tax rises and higher interest rates, claim reports.
The cost of living has already surged to 4.2 per cent in October up from 3.1 per cent the previous month, the Office for National Statistics [ONS] has said.
The figure is more than double the Bank of England's target rate of 2 per cent, and is based on the consumer Prices Index (CPI) measure of inflation.
The ONS said the rise was driven by rocketing energy bills after a 250% leap in wholesale costs.
Second-hand cars and the cost of eating out also accounted for the steep rise.
Shadow Chancellor Rachel Reeve said alone it will leave households more than £1,000 worse off - or £20 a week over a year.
But reports in the Daily Mail claim that the cost to the wallet could be double that, with tax hikes looming as well as a potential interest rate rise.
The Institute for Fiscal Studies was said to have calculated that an employee on a salary of £30,000 would be about £1,420 worse off in real terms by the end of next year.
And a rise in interest rates from 0.1 per cent to 0.75 per cent could add about £600 to a £150,000, it has been reported.
Grant Fitzner, chief economist at the ONS, said: "Inflation rose steeply in October to its highest rate in nearly a decade.
"This was driven by increased household energy bills due to the price cap hike, a rise in the cost of second-hand cars and fuel as well as higher prices in restaurants and hotels.
"Costs of goods produced by factories and the price of raw materials have also risen substantially and are now at their highest rates for at least 10 years."
Last week the Bank of England made the decision to hold interest rates at record lows despite warnings the cost of living was spiralling out of control.
But the Bank said a rate increase was on the way as it warned gas and electricity tariff increases will see CPI leap to around 5% next April.
Tax hikes are also due to come into force in April, chiefly a rise in national insurance to pay for extra spending on health and social care.
Kevin Brown, a savings specialist at investment firm Scottish Friendly, said: "Inflation is now at its highest level for ten years and is set to carry on rising into next year.
"Many younger families in particular will have little experience of dealing with such sharp price rises and, with Christmas on the horizon, plus tax hikes due in April, it could be a challenging time financially for a lot of them.
"It also seems highly likely that the Bank of England will raise interest rates at the next opportunity so households should also be prepared for mortgage costs and other loan repayments to go up."
There have also been warnings that new council tax bills could rise in April.
Heidi Karjalainen, a research economist, said wages would need to increase 'at a rapid pace' for people to maintain their standard of living.
She added that the squeeze on household budgets would be felt across families with a range of incomes.
