The boss of the Bank of England has said he is "very sorry" that UK households are facing a cost of living squeeze, despite a vote to hold interest rates on Thursday.
The Bank predicted that inflation will peak at 5% early next year, the highest in a decade.
Under its latest forecasts, wages after tax will not keep pace with inflation until at least 2023 - a blow to households across the country.
"I'm very sorry that's happening. None of us want to see that happen," Governor Andrew Bailey said told the Today Programme.
If inflation reaches 5%, that would mean the cost of everyday goods are now 5% higher than this time last year.
On Thursday, the Bank sent the pound tumbling after revealing interest rates would remain at historic lows of 0.1%.
Threadneedle Street had been under mounting pressure to cool inflation, amid a wider cost of living crisis in recent weeks.
Inflation was recorded at 3.1% in September due to soaring gas prices and a supply chain crisis.
Any such change would have helped curb inflation back to around 2% for households and push for a rise in interest rates for savers - although it would have led to higher loans and mortgages.
The Bank's nine-strong Monetary Policy Committee (MPC) voted seven to two in favour of keeping rates unchanged at 0.1%.
But it said a rate increase was on the way as it warned gas and electricity tariff increases will see the Consumer Prices Index (CPI) leap from 3.1% to 4.5% by November and hit around 5% next April - its highest inflation forecast for a decade.
On Friday, Bailey said: "Inflation is clearly something that bites on people's household income. I'm sure they're already feeling that in terms of prices that are going up."
But he said the Bank wanted to see what impact both domestic and global issues were having on the cost of living before deciding on whether to raise rates.
Mr Bailey said current conditions were different because inflation was being caused by global "supply shocks" rather than demand pressure in the UK economy.
The Bank did not rule out a rate rise at its next meeting in December. The MPC meets every six weeks.
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But commenting on the decision not to raise borrowing costs this month. Mr Bailey said: "Putting interest rates up, I'm afraid, isn't going to get us more gas."
Danny Blanchflower, a former member of the MPC who is now an economics professor at Dartmouth College in the US, said the Bank should be wary of giving any forecast of where interest rates are going.
"We have no historical precedent for what's happened," he said. "We've never seen a shock of this kind and the big thing we are seeing at the moment is the furlough scheme is coming off, there is going to be an increase in taxes on National Insurance [and] universal credit was just cut.
"So, the central bank really hasn't a lot of clue what is going on."
He said: "This is a really big uncertain world and everybody should tread cautiously. I'm afraid I have to say... you have to take what the governor of the Bank of England and the Monetary Policy Committee said with a very large pinch of salt."
Why do interest rates change?
The Bank of England sets the Base Rate in the United Kingdom. It's been doing this independently from the Government since May 1997 – so more than 20 years.
But it is still guided by the Government – who sets its targets to achieve, if not telling it how to achieve them.
The targets are to keep inflation – as measured by the consumer prices index – as close to 2% as possible and to keep the economy growing at a sustainable rate.
Traditionally that meant if inflation was rising, so would rates. While if prices were falling, interest rates would too.
The idea is that when interest rates were high it encouraged saving and discouraged borrowing – meaning people would spend less money and prices would fall again.
Inflation currently stands a 3.1% but the Office for Budget Responsibility (OBR) last week warned it could jump to a 30-year high in the coming months.
However, any increase in the base rate means higher interest payments for the Government because of the £2.2trillion mountain of debt it has built up.
Chancellor Rishi Sunak said even a one percentage point increase in interest rates would cost the country £23billion in payments.
