Workers caught in standard of living squeeze as inflation rises above pay while prospect of May win sends FTSE 100 soaring

WORKERS are caught in a standard of living squeeze with soaring inflation pushing the cost of goods up while wages stagnate.

Figures from the Office for National Statistics show inflation rose 0.4 per cent last month to 2.7 — its highest since late 2013.

And the FTSE 100 had another record-breaking day as it smashed the 7,500-point barrier for the first time.

But wages grew by just 2.3 per cent in the year to February. Union chiefs say workers are £20 a week worse off than before the financial crash.

The ONS put the increase in the Consumer Prices Index down to rises in the cost of clothing, car tax, air fares and electricity bills.

But falls in the cost of gas, petrol and diesel helped to ease some of the pain.

The latest inflation figure is above the two per cent target set by the Bank of England, which said it could peak at three per cent later this year.

Investment manager Elliott Silk warned the inflation rise was bad news for savers and pensioners.

And TUC general secretary Frances O’Grady said living standards must be a key ­battleground in the election.

She added: “The last thing Britain needs is another real wage slump. But rising prices are hammering pay packets.”

Meanwhile, the FTSE 100 ended the day at a record high of 7,522.03 — after peaking at 7,533.45.

Britain's stock markets soared to new highs as investors expressed optimism about the forthcoming election and Brexit negotiations.

Analysts pointed to the prediction of a large Conservative majority at the General Election as an explanation for the market optimism.

The boss of Vodafone also boosted sentiment when he predicted that Britain and the EU would have no difficulties coming to a mutually beneficial deal.

Jasper Lawler, a senior market analyst at London Capital Group, said: "The UK stock market reached a new milestone today when the FTSE 100 hit 7,500 for the first time.

"Investors seem to be feeling confident about the outlook for Britain under what is expected to be the biggest Conservative Party majority since Margaret Thatcher."

He also pointed to new inflation data from the Office for National Statistics, which showed prices rising at the highest level in more than three years.

CPI rose to 2.7 per cent last month, prompting investors to sell bonds and buy stocks instead.

The day's biggest riser was Vodafone, which soared by nearly 4 per cent after publishing its annual results.

The firm's boss Vittorio Colao said he was optimistic that Britain and the EU would thrash out a good Brexit deal, despite threats from both sides that they could walk away from negotiations.

He told Reuters: "Once you go through the usual pre-negotiation tactics that everybody uses, I think pragmatism should prevail.

"The leadership of Europe and the leadership of the large European countries will at some point find a common platform with Britain."

Mr Colao cast cold water on the suggestion that Brexit would lead to "a slowdown in the economy or even worse consequences", saying: "It is nobody's interest to generate that."