One of Britain's leading travel firms, Tui, which owns Thomson and First Choice, has confirmed that its package holiday prices will rise by 5% in 2012.
The move will add around around £27 per person to our average annual sun-seeking holiday, or £110 for a family of four.
The news will be a blow to families already struggling with rising living costs and stagnant wage packages, and it could see families being 'priced out' of a foreign holiday.
In fact, travel market experts Mintel told the Mirror that spending on holidays at home and abroad plunged to a five-year low of £33.4 billion in 2010, adding that holidays are becoming the 'preserve of better-off customers'.
According to the Daily Mail, four in 10 people now classify as a luxury, which should be ditched in times of financial strife.
Tui, which carried 5.4 million UK holidaymakers last year, blames the move on higher fuel and hotel costs.
The company admitted that later summer bookings this year were already down by 7% by the end of July, however they are still set to make a profit of around £470m - a rise on last year's £447m - thanks to good trading across the rest of Europe.
Tui's package holiday increase will also be compounded by the threat of a massive hike in Air Passenger Duty next year by a possible 10%.
The Express warns that average selling prices for next year's holidays are actually already 10% higher so, coupled with a 10% APD rise, that actual cost of holidays for Brits in 2012 could be a whopping 20% higher in total.
British travellers already pay the highest levels of air tax in Europe, around 8% more than others in the EU.
MPs have writhed to Chancellor George Osborne to urge him to scrap the double-inflation rise that could 'stop ordinary families from flying'.
His final decision will be announced on 29 November.