Britons have tightened their belts in response, spending less in supermarkets and ditching their streaming subscriptions.

Indeed, real pay — workers' wages that take inflation into account — suffered its biggest drop in more than two decades between March and May, official data showed this week.

Truss is hoping to offer workers and businesses a lifeline, promising to slash income taxes and scrap a planned tax hike on businesses next year. But increased spending could exacerbate inflation and undermine the Bank of England's efforts to slow down the economy to tame runaway price increases.

Sunak has also promised to cut taxes but only once inflation is brought under control.

The Institute for Fiscal Studies (IFS) has estimated that Truss' total tax cuts would amount to £30 billion ($36 billion). She has not laid out any plans to rein in public spending to compensate for a drop in tax receipts.