THE COST-of-living crisis cannot be relieved by increasing wages, Boris Johnson said yesterday, as he warned the country risked a “wage-price spiral” if pay packets grew at the same rate as prices.

The Prime Minister promised tax cuts and a “steady stream” of low-deposit mortgages to help young people climb on to the housing ladder, in a speech intended to reassert his authority on the Conservative Party after Monday’s bruising confidence vote.

The economic comparisons to the 1970s came as prices rose above £100 for a tank of petrol.

Calling for caution in the face of rapidly rising inflation, Mr Johnson warned during a key speech in Blackpool that the Government would “fan the flames of further price increases” if it tried to spend its way out of the cost-of-living crisis.

Prime Minister Boris Johnson during his speech at Blackpool and The Fylde College in Blackpool,

He added: “We can’t fix the increase in the cost of living just by increasing wages to match the surge in prices. I think it’s

naturally a good thing for wages to go up as skills and productivity increase – that’s what we want to see.

“But when a country faces an inflationary problem you can’t just pay more and spend more. You have to find ways of tackling the underlying causes of inflation.

“If wages continue to chase the increase in prices then we risk a wage-price spiral such as this country experienced in the 1970s.”

Amid the soaring inflation, motorists are continuing to be squeezed at the petrol pump as yesterday the cost of filling the average car tipped over into three figures, with some forecourts across the country selling both petrol and diesel at more than £2 per litre.

Ministers are now coming under pressure to cut fuel duty even further, as the AA hailed a “truly dark day” for drivers.

Figures from data firm Experian show the average price of a litre of petrol at UK forecourts reached a record 182.3p on Wednesday.

That means the average cost of filling a 55-litre family car is £100.27.

The average price of a litre of diesel on Wednesday was 188.1p.

AA president Edmund King demanded a 10p per litre cut in fuel duty and a fuel price stabiliser to lower duty when pump prices rise and increase it when prices drop.

There have been reports of fuel firms not passing on the existing 5p cut in fuel duty to customers at the pump and Mr Johnson warned that the Government was watching them to ensure the savings did filter through.

“What I want to see is those cuts in taxation not just swallowed up in one gulp, without touching the gullet of the fuel companies, I want to see those cuts having an impact on the pumps,” he said.

“And we are watching very closely to see what happens.”

Country risks 'wage price spiral' if wages increase in line with prices, Boris Johnson suggests