Howard Archer, senior UK and European economist at Global Insight, said that this month’s increase had not had the full effect that the Bank of England hoped for.

Also to blame were rising debts, fuel prices, bills and university tuition fees which are also likely to push up inflation away from the target rate.

“An interest rate hike before the end of the year remains a very real possibility, particularly if economic growth remains relatively robust in the third quarter,” said Mr Archer.

The Bank of England raised the interest rate to 4.75 per cent this month in a bid to tackle inflation.

While this has pushed up the amount of monthly debt people repay on loans and mortgages linked to the rate, those hit by the rate rise should prepare themselves for another increase.

Mr Archer said that the Bank of England is “unlikely to relax” its efforts to tackle inflation, meaning that many may start saving now for future interest rate hikes.

Residents spend 97 per cent of their income on basics such as council tax, utility bills, travel expenses and repaying debt, the YouGov poll found, beating London.

Commenting on the findings, Combined Insurance spokesman Nigel Brittle said: “When monthly income is taken into account, and all monthly commitments are totted up – not just mortgages – it’s clear there are residents in other parts of the UK that are living closer to the financial edge.”

Last month Ernst & Young concluded that the average household has ten per cent less disposable income than in 2001 due to rising debt, bills and taxes.

The proportion that people have to spend on necessities is only 73 per cent of their income in London, but eight other cities are worse than it for the amount spent on debt and bills.

Almost £160 spent by those in the Welsh city went on servicing debts such as credit cards out of an average monthly wage of just £1,088, leading Mr Brittle to say such that this showed an “exorbitant cost of living”.

Robert McKinnie hanged himself at his Isle of Wight home in February after he received around 15 calls per day from banks demanding repayment for debt.

“They were aggressive, threatening calls, threatening him that he would lose his home and with insolvency,” said his widow, Suzanne.

Father-of-two Mr McKinnie owned Ram Electricals but his family said that big businesses did not pay the firm for work completed which pushed it to the brink of bankruptcy.

With banks demanded repayment on personal loans, Mrs McKinnie said that the constant harassment led her husband to go from a “happy-go-lucky type” to a recluse.

She demanded the creation of regulatory authority to stop banks from committing what she saw as harassment over debt.

According to statistics from price comparison website moneysupermarket.com, a tenth of Britain’s cardholders are facing a bill of £120 million in interest charges.

Rob Kenley, head of credit cards at the website, said: “Our research should provide consumers with the impetus to consider switching their card, but they must do their research beforehand to avoid making the wrong choice – which could prove expensive.”

Mismatched credit cards are already affecting both consumers and banks, which have reported a leap in cases of bad debt.

Nearly half of people do not shop around when taking out a credit card, many just taking their bank’s offer or a deal sent in the post.

Mr Kenley urged people to look beyond headline rates and think about how they are spending to ensure that they get the best card for them to help them avoid unnecessary debt.