The rise in the annual CPI inflation rate to 2.6% means UK households collectively need to find £23.6billion a year to maintain their standard of living enjoyed 12 months ago, according to retirement income specialist MGM Advantage.
The typical UK household will need to spend an extra £897 a year to maintain their standard of living from just one year ago.
Aston Goodey, Distribution and Marketing Director, MGM Advantage said: "The surprise rise in inflation will come as a shock for many people who continue to feel the pinch. Each UK household will somehow need to find an extra £897 a year to maintain their standard of living, or as many millions of UK families have seen, their standard of living falls dramatically.
"Inflation is particularly damaging for retirees, whose income is typically fixed. There is some good news today as the upward pressures on inflation were largely from air fares, clothing and footwear. However we have yet to see the impact of the current US drought on food prices here in the UK.
"Given the backdrop of recent high inflation, people approaching retirement are continuing to look for ways of managing the corrosive effects of inflation. This has created strong demand for retirement income solutions that can provide some protection against the rising cost of living."
MGM Advantage research shows that 38% of retirees are concerned about inflation eroding spending power.
Nearly a fifth (19%) of non-retired people were unaware of the negative impact of inflation, while over half (54%) were not aware of any way of off-setting it.