Spending cheer as inflation falls Households have suffered one of the tightest squeezes on record, according to the Institute for Fiscal Studies, with inflation outstripping wage growth since the recession. Average incomes fell at the fastest rate since 1981 last year, declining 3.1pc to leave families no better off than in 2005, due to soaring prices. However, the Office for National Statistics (ONS) is expected to reveal on Tuesday that the consumer prices index (CPI) fell to 2.8pc for May, down from 3pc in April. Only last September, CPI was 5.2pc. Philip Shaw, UK economist at Investec, said: "We expect the main factor to be petrol prices which fell by some 2.5pc in May, and when combined with a 1.3pc drop a year ago, would lower the targeted measure by 0.2pc." George Buckley, at Deutsche Bank, warned that inflation could be unchanged at 3pc because "air fares are not expected to have fallen sharply as they did in May 2011." Even though it is falling, inflation is still far higher than growth in average earnings. Official figures on Wednesday will show that the pressure on households is only easing rather than reversing as wages rose by just 1pc in April.