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New Research Reveals Drop in Household Income
A study by the Centre for Economics and Business Research (CEBR) has found that most families’ disposable income has fallen by around £8 a week over the past 12 months, putting considerable pressure on those trying to get out of debt.
The CEBR report, which was commissioned by supermarket giant Asda, found that the average family income was around £633 a week - some 3.6 per cent higher than May last year.
However, it warned that taxes and National Insurance had risen by around 6.5 per cent over that time.
The report said that once this was taken into account, alongside the higher costs of essential household spending like transport, utility bills, food, clothing and accommodation, the average family found itself with just £131 a week - a 6 per cent drop since May 2007.
It noted: "The prices of important essentials such as food, gas, electricity and transport have all risen considerably over the last year - with inflation for all these categories in excess of 6 per cent.”
Recent Government figures have also revealed the knock-on effects of higher fuel and food bills, with annual inflation at an 11-year high.
The data showed that in May, the consumer price index (CPI) measure of inflation increased to 3.3 per cent, higher than at any time since the CPI began in 1997.
The retail prices index, which is the measure of inflation used most often during wage negotiations, increased to 4.3 per cent, and has easily outstripped average pay increases since the beginning of last year.
Bank of England governor Mervyn King has also warned that many people will see their incomes stall this year, due to rising prices, which may affect their ability to clear debt.
Debt Management News posted on 10 July 2008
