Britain’s biggest holiday firm warned that the price of a summer holiday will rise next year as it bears the brunt of higher fuel and accommodation costs.

Thomson and First Choice owner TUI Travel said it will pass a five per cent increase in the cost of providing a package holiday on to customers.

The news signals more pain for consumers who are already going abroad less as a result of the weaker pound and the squeeze in disposable incomes.

Average selling prices for next summer are up 10 per cent, although this is partly because it has sold more specialised holidays, which tend to be more expensive.

TUI also shed more light on the decline in the UK holiday market, saying that bookings for next summer are down 11 per cent.

TUI added that bookings for the later part of the summer season were down seven per cent since the end of July as consumer sentiment worsened in the UK.

Across the summer, the total number of UK customers going away with TUI was down one per cent, while average selling prices were up five per cent.

It was a similarly gloomy picture for winter bookings from the UK, which are down 11 per cent.

TUI has reduced the number of winter holidays it sells, particularly to destinations in Egypt and Tunisia, which are still being hit after the uprisings in north Africa earlier this year. Average selling prices are up six per cent.

For next summer, the group is reducing the number of holidays by four per cent.