Benefits such as universal credit will rise by less than half the inflation rate this April, leaving nine million families £500 poorer as the cost of living crisis deepens.
It means another 400,000 people could be pulled into poverty while the price of everyday goods in the UK soars, new analysis reveals.
Economists predict inflation will hit seven per cent, but ministers said they would only increase benefits for people on low incomes by 3.1 per cent.
“At a time when the case for support could not be clearer, the government is choosing to further erode the value of benefits that are already wholly inadequate,” said Peter Matejic, deputy director of evidence and impact at the Joseph Rowntree Foundation (JRF) which carried out the research.
“People on the lowest incomes have already experienced a decade of cuts and freezes, followed by an overnight cut of £1,000 last autumn [when the government cut universal credit by £20 per week]. The decision not to uprate benefits in line with inflation represents another cut for millions of people whose incomes will now fall even further behind the cost of living.”
Out-of-work benefits are already at their lowest rate in real terms in 30 years, analysts said.