The war in Ukraine is to fuel spiralling costs for everything UK households buy - including food, fuel and energy.
Inflation - the rate at which everything gets more expensive - is forecast to reach 8.7%, significantly higher the Bank of England's projection of 7.25% in February.
As well as direct price increases in food, oil and gas charges - rocketing because of the conflict - will drive prices up as food transport and production costs escalate, reports The Mirror.
The Centre for Economics and Business Research reckons the combined effects will slice £2,553 off household budgets in 2022.
About half the figure - £1,259 - can be directly attributed to the war in Ukraine, the CEBR says.
It urged Chancellor Rishi Sunak to take steps as the UK faces its worst fall in living standards since records began.
CEBR deputy chairman Doug McWilliams said Mr Sunak could cut fuel duty or temporarily reduce VAT.
He said help was essential because growth this year stands to fall from a previously forecast 4.2% to 1.9%.
Minister Michael Gove warned the UK faced an energy shock similar to the 1970s when inflation hit 23% and interest rates stood at 17%.
A report by think-tank the Resolution Foundation said families are facing the biggest fall in incomes since the mid-1970s, as prices surge on top of a national insurance tax hike.
"The crisis in Ukraine has increased both the scale of price rises but also the degree of uncertainty about their levels and duration," the Foundation's report said.
"The UK's post-Covid economic recovery is well under way, but a deep living standards downturn is just getting going," it added, also warning that wages are not forecast to grow particularly fast either.
Its economist, Adam Cortlett, said soaring bills would hit low and middle-income families the hardest.
Most working age benefits and the state pension are due to rise by 3.1% in April - a time when the increase in the cost of living could be as high as 8%.
A government spokesperson said: "We recognise the pressures people are facing with the cost of living, which is why we're providing support worth around £20bn this financial year and next to help."
This support package includes a council tax discount, freezing fuel duty and an energy bills rebate.
"We have also boosted the minimum wage by more than £1,000 a year for full-time workers and our £500m Household Support Fund is helping the most vulnerable with essential costs," they added.
