According to the Consumer Price Index, the virtual shopping basket which tracks the prices of everything from tomatoes to television, the rate of inflation stands at 2.5 per cent.

The CPI is viewed by the Government as something of a bible for all things consumer-related, but in recent months the figures have seemed like they've been plucked out of the air.

Against the back-drop of the country's supposedly healthy rate of inflation, belts have been tightened, according to one report a fifth us have already cancelled or postponed holidays, and for many, home improvements have been put on hold. Despite what the CPI figures say, the experiences of many put the true cost of living much higher and with good cause.

According to the Conservative Party, household bills have soared by £27 a week in just a year and in the past nine months butter has risen by 37 per cent, a dozen eggs by 34 per cent and a loaf of bread by 28 per cent.

Even allowing for a large helping of anti-Labour spin, the average household does appear to be taking a big and very noticeable hit in the pocket. Anyone who owns a car will know how costly travelling on four wheels has become.

Driving costs, including fuel, have increased at twice the rate of inflation, which means running, say, a Ford Focus on an average 10,000 miles a year has gone up from £1,409 to £2,197.

Add in higher wheat prices, increases to rail fares, which in some cases have rocketed by 37 per cent, last month's 10 per cent jump in gas and electricity prices and the CPI rate does start to look more than a little optimistic.

As the conflicting figures have been bandied around, David Cameron has accused the Government, not for the first time, of losing touch with the electorate, while Yvette Cooper, Chief Secretary to the Treasury, continued to claim that in the face of global uncertainty, the UK economy is stable.

So who is telling the truth? According to Capital Economics, the problem is not that the CPI – which calculates the rising cost of smoothies and crates of lager but not council tax – is inaccurate or open to manipulation, but rather that it is a general indicator not designed to reflect the experiences of specific groups.

"It is accurate in terms of what it was set up to do," says the firm's UK economist Paul Dales.

"It is a measure of average inflation and therefore there
are obviously going to be people who are being worse hit. It takes in a broad sweep of 650 products and services, and because it doesn't break down the costs in terms of the goods we buy most frequently, it is impossible to read specifics into the figures.

"However, we have done our own calculations, stripping out those products which people buy only occasionally, like televisions and dvd players and concentrating on those things like food and petrol which people buy every week.

"Those calculations show inflation for necessities is rising much faster than the CPI average. In January, it stood at four per cent and by last month it had reached 5.1 per cent. By comparison, the rate for luxuries was -0.1 per cent at the start of the year and has risen to just 0.3 per cent.

"By breaking it down, it's easy to see why perceptions of how much they are spending each month doesn't fit in with what they are being told is happening with inflation."

Research by Capital Economics has also suggested middle-class households are bearing the brunt. With outgoings, often including private schools and university tuition fees, inflation was estimated at seven per cent. In fact, with house prices and salaries the only thing not going through the roof, it seems the true cost of living will continue to burn a hole in all our pockets.

"My feeling is that it will probably get worse in the short-term, mainly because the latest rise in oil prices will push the cost of petrol up even further," says Mr Dales. "However, I think if you look further ahead to the next six to 12 months, things will start to level out and in some cases prices may even fall.

"The problem for the Bank of England is that if people's perceptions of inflation continue to be greater than the Government's figures, it could lead to a demand for wage increases. If that happens, companies will be forced to put up prices, which will have a knock-on effect for interest rates. If they rise then those already struggling financially could find themselves in an even worse position."