Consumers are beginning to feel the pinch of rising prices, according to the latest survey.

The Consumer Barometer from Lloyds TSB Corporate Markets showed that consumers felt prices had gone up in the last year.

Close to three quarters (73 per cent) of respondents said prices had risen and 70 per cent thought things had got more expensive rather than cheaper over the last 12 months.

A further 81 per cent expected prices to rise further in 2008.

"A record number of consumers are feeling the pressure of higher prices and this, together with worsening employment prospects, is clearly having a negative impact on consumer spending," said Trevor Williams, chief economist at Lloyds TSB Corporate Markets.

"But as consumers struggle to pay their bills, we expect demand for higher wages to increase - official data showed wage growth hit a six month high in September."

Energy and food prices are leading the charge, but interest rate rises over the last 12 months and tighter lending arrangements in the wake of the credit squeeze have also pushed up mortgage payments.

Meanwhile, the floods over the summer have already begun to impact on home insurance premiums, with further increases likely if the industry is dissatisfied with the government's response.

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