We’ve less disposable income- and what we have isn’t going to the High Street

14 March 2013

We know things are tough, and that prices are on the increase, but now someone has actually bothered to crunch the numbers and has discovered that the overall cost of running a household has increased by 25% in just five years, with some bills going up by as much as 67%.

Of course, energy bills are among the worst culprits, with gas and electricity charges going up 52% and 32% respectively, but it is comprehensive car insurance that has suffered the biggest rise, owing to increased claims and EU regulation on top of rising prices. Add fuel, with a 33% rise, and driving households are paying out way more than they used to.

New research from comparison site uSwitch.com also shows that food bills are up 17% since 2008 with the average weekly shopping bill rising from £220 to £256 a week. Over half  of those surveyed (55%) say that the rising cost of living is their biggest cause for concern at the moment, compared with 29% who are most concerned about their health. Presumably no-one is that concerned about dying of malnutrition, starvation or hypothermia then.

Part of the problem comes because average salaries have not kept pace with increased costs. Despite rising inflation, wages have only risen 6% in the whole five years- from £24,900 a year in 2008 to £26,500 at the end of 2012. Once you take inflation into account, however, wages have actually gone back to 2003 levels. Just one in two consumers (52%) have had a pay rise this year; more than one in three (36%) have had their pay frozen for 12 months or more and one in eight (13%) have actually had their pay cut.

But according to uSwitch, almost 60% of consumers fear next week's Budget will hit their already battered pockets even harder. Two thirds of consumers would support the introduction of a 'mansion tax' on homes worth over £2 million, and 84% are calling for the personal tax allowance to be raised beyond £10,000 despite the previously announced higher-than-inflation uplift to £9,440 for 2013/14. 85% believe that the Chancellor does not understand the financial fears of ordinary people and 71% say that their financial situation has worsened since the Coalition came to power in 2010.

Michael Ossei, personal finance expert at uSwitch.com, said: "Consumers are anticipating next week's Budget with a mix of dread and despair. Spiralling living costs are stretching household budgets to their absolute limit and people are running out of ways to fund their ever-increasing bills. With salaries failing to deliver, many are being forced to turn to debt just to stay afloat. Unfortunately, the most accessible forms of debt are often the most dangerous.”

Talking of debt, however, having less disposable income isn’t necessarily stopping people spending. New figures from Barclaycard indicate an increase in consumer spending- jumping by 4.2% last month, which is the fastest rate in more than a year.

Nevertheless, the recent doom and gloom from the high street is not set to end just yet. The figures show that the increases are not in retails- spending on men’s clothing was down by almost 6% and even women’s clothing sales were down almost 2%. What people are spending their money credit on is on the finer things in life, with leisure and travel the big winners; spending with airlines was up 14% compared with the same period last year, and in restaurants it was up by over 11%.

Of course, everyone’s situation is different, and it may be that the people struggling to make ends meet are not the same people who are flying off to fancy restaurants. Perhaps the wealthy are going on more holidays, while the common populace wring their hands in despair? Surely that can't have been the Conservative Coalition Government's plan...


  • Nelmer
    Surely the figures from Barclaycard show people are spending money they don't actually have?
  • Tony
    The increase in Barclaycard spending will be down to people ticking on their holiday balances...which become due now for the main UK holiday period. Feb/March/April are always holiday balance times...just wait for the May figures...
  • shiftynifty
    Privately, something close to desperation is starting to develop inside government. After watching the slide in bank shares on Friday, one cabinet minister did not altogether joke when he said: "The banks are fucked, we're fucked, the country's fucked."...lord mandelson 2009 Roll forward 4 years ...and ...lo and behold we are in a worse position....for the seventh biggest economy in the world we sure ain`t got it right....no private jobs are being created...the gap between rich and poor is getting bigger....we are a nation of spiv`s....selling to each other in desperation
  • mm71
    I'd be interested to see exactly what type of transactions were put on the extra credit card spending. I wouldn't be surprised to see groceries and fuel being put on as people struggle to make ends meet.
  • klingelton
    Well, this does paint a bleak picture of life in Britain at the moment doesn't it. I have to be honest, I went into town for a few beers with old friends on Saturday evening, and the place was dead until about 11:30 when everyone (who were obviously drinking cheap supermarket special brew at home) joined us. Industries that shouldn't be privatised (energy) are, without the level of competition needed to regulate price. The insurance industry is a laugh. you need insurance for your car, cars are viewed as a right now, not a privilege and getting people out of their cars and onto public transport is nigh impossible because the budgets that go to provisioning decent routes has been slashed. Knowing all this, the main insurance underwriters can crank the price of their insurance up and up, safe in the knowledge us mere plebs can do nothing about it (apart from get out of our cars, but who wants to do that, right kids?!) Finally, the banks - who take flack for much of the problem, but they were merely the catalyst that fanned the flames of a broken capitalist model we run in this country, where the normal man stands not to benefit from the gains of corporate Britain, but where the energy companies can charge a premium to "reinvest into Britain's infrastructure" so as not to affect their bottom line and reduce the dividend to their shareholders. News mates - investment comes from your own pocket in order to streamline your current business - thus increasing profitability and to grow your business. You don't charge your customers for this! Wouldn't work in any other industry!

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