Families feeling the squeeze: Your stories
Bank of England governor Mervyn King has said that the squeeze on UK take-home pay is necessary.
Speaking in Newcastle, the Bank of England governor said the current high inflation rate was unavoidable as the UK economy adjusts to higher commodity prices and becomes more competitive.
BBC News website users have been getting in touch to tell us how the squeeze on pay has been affecting their lives and the things they are going without to cope with the situation.
Alan Lucas, Nottingham
I work in the building trade and I've not had a pay rise for four years, this will put further pressure on my income, l just despair.
The building trade is at the lowest ebb l have seen in 40 years in the industry and feel and l'm being penalised for the errors by the banks.
When bank managers are paid bonuses it just proves that for some the recession is still a gravy train. It is one rule for them, one rule for us.
The first thing to suffer has been the holiday.
I work a 45 hour week and it's the only real respite I get from work.
Usually we go abroad but we may have to look closer to home, perhaps going to a holiday camp.
Christmas this year was the most miserable ever because we were restricted on what we could afford to buy.
I just wish that l had voted Labour and not this farce of a government. Come back Labour all is forgiven.
Laura Fish, Leicestershire
I am disgusted that the governor can make comments like that. You can't say it's right. It's not.
Do they struggle to put petrol in their cars to get to work? It's costing me up to £30 a week to get six miles to work in my ten-year-old Fiesta.
Do they struggle when doing the weekly shop and calculate every item that goes into the trolley? Mine's £26 more than it used to be.
Do they live from week to week waiting for the next little bit of money to come in to ensure they can pay for their children's school trips and lunches? My daughter is an only child and I work full time so that she can have them.
We're buying her school clothes from supermarkets now and my mum buys her school shoes once a year. I don't know if I could afford them myself.
She had a second hand present this Christmas.
I have worked since I was 16-years-old, I am now 33 and I have no savings. I worry about my future.
We haven't had a holiday in three years, and shop at cheaper shops, we even think twice about having a sandwich and a drink when we're out.
I'm thinking of giving up smoking, it is my only pleasure in the week, to pay for my daughter's after school activities and clubs.
John Hatton, Wigan
The biggest effect is that I've got a particular car journey that I'm thinking of cutting out.
I'm a rugby fan and always try to go to away games to watch Wigan play.
The rising cost of the fuel is getting too much for me, so I'm thinking about not going at all as the train doesn't work out cheaper.
I had a minimal pay rise last year, but a pay freeze in the two years before that, so my wage hasn't risen in line with inflation.
We've got two teenage daughters and food bills are a big worry as they've gone up considerably.
We never used to look at supermarket own brands and budget lines but now we're having to consider them more carefully.
One daughter is hoping to go to University next year so I'm worried about how we're going to manage.
Even if she goes to a local university and lives at home I don't know how we'll fund the extra travel costs, as well as food and all the other things she'll need for her studies.
Mervyn King expects the British public to accept these problems but bankers are still getting huge bonuses and therefore not affected.
We're feeling it. Even though we're in a fortunate position of two incomes, with three children the price rises on food and fuel are biting. How to cut back? We're attempting to spend less on food; eating less meat and preparing more food from scratch. Planning camping trips for school holidays, trips abroad are a distant memory. Kristina, London
Inflation has noticeably eroded the standard of living for my wife and myself. The prospect of further wage squeezes and no long-term job security adds to the anxiety of what is happening. It is maddening to see the rich get richer, the politicians ripping us off and telling bare faced lies and Mervyn King telling us that the pain is necessary. If this country is not careful we'll see riots as seen in Tunisia, Egypt, Greece and our own student demonstrations. Ray Crossman, Twyford, Reading
It's alright for Mr King to say this, he doesn't need to live on £16.5k a year. How about he drops his yearly wage to the average take home the pay of the average worker in Britain, and join us in the hard times before forcing the companies we work for not to give us a pay rise that we work 40+ hours a week for? Hard times for us, easy times for him on his wage. I wonder if he will feel the pinch, maybe cut back on buying a car or two this year and take one less holiday? Duncan, Shrewsbury
I am a public sector worker and I am at the start of a year freeze. My wife has dropped pay and we have two young children. I am concerned about the coming years as the interest rate will inevitably rise and this will have a huge impact on our mortgage repayments. The Vat rise and increases in utility bills has had the biggest impact on spending. I think many people will reduce spending like us and we won't be in a position to help bring about improvements in the economy. Until household income out paces price rises we will remain very cautious. Matthew, Usk
Just looking at Mervyn King's statement, perhaps he can explain exactly how he expects families to pay their bills. Over the last few years, many of the UK work force have not had a pay rise, yet the cost of living has gone up. Everything seems to be going up, yet pay stays static, stretching finances even further. At this rate we will become a country of poor people. Jim Staynings, Bristol