Joseph Rowntree Foundation report warns that many more in poverty than realised

Poorer households have been harder-hit by the rising cost of basics over the last decade than those on higher incomes, but formal measures of poverty have not reflected this in their calculations, argues the research, compiled by the Institute for Fiscal Studies (IFS).

The report said formal measures of change in poverty tended to assume everyone felt the same impact of prices rising.

But in recent years, the prices of goods such as food and energy that tended to take up relatively large chunks of the budgets of poorer households had risen at a faster rate than the cost of goods with a greater impact on higher earners, such as mortgage repayments, motoring and leisure services.

The report estimates that if the harsher impact of inflation on lower income households was taken into account, about 300,000 more people could be living in absolute poverty - meaning that their income falls below a given standard of living - than standard measures would suggest.

Katie Schmuecker, policy and research manager at the foundation, said: "Costs rising faster than earnings causes problems for us all, but it is the poorest families who have faced the greatest pressure from rising prices over the past decade.

"Any plans at the next election to help improve family living standards must get to grips with the high cost of essentials, as well as how to boost wages and incomes."

She said the Living Wage - which recognised the cost of essentials in how it was calculated - was an important part of the answer, especially for the 5.2 million workers who earned below this rate.

"But it must be complemented by a wider strategy that includes measures to address the cost of essential goods and services, the nature of work at the bottom end of the labour market and how well the tax and benefit system work.

"Otherwise millions of struggling households will find it even harder to make ends meet - even as the economy recovers."