TUC figures show everyone has got poorer month-on-month for last two years as soaring food and utility bills drag down economy


The cost of living for the poorest 10 per cent of households increased by 4.1 per cent in March, eight times faster than average weekly earnings, according to the TUC living standards index which has been updated today ahead of new inflation figures published later this morning.

The TUC living standards index, which tracks the cost of living for different households against average weekly earnings, shows that CPI inflation for the poorest 10 per cent of households was 4.1 per cent in March, compared to 3.3 per cent for the richest households in the UK.

With average weekly earnings rising by just 0.5 per cent over the same period, wages fell in real terms by 3.6 per cent for the poorest households, the joint sharpest fall in pay for over two years.

The poorest 10 per cent of households have been experiencing higher inflation over the last year because they spend a larger proportion of their income on food and utility bills – whose prices have risen faster than headline inflation – than the richest households.

The poorest households spend 17 per cent of their income on food and non-alcoholic beverages, whose prices rose by 4.6 per cent in March. The richest 10 per cent of households spend just 10 per cent of their income on food and are therefore less exposed to rising costs.

Utility bills – whose prices increased by 6.8 per cent in March – are by far the biggest single expenditure item for the poorest households, who spend over a quarter of their income on gas, water, electricity and other fuel bills.

The biggest single expenditure for the richest households is transport, whose prices increased by 3.7 per cent in March.

The living standards index shows that wages have been falling in real terms since May 2010. People will therefore need at least two years of real wage growth – fuelled by falling inflation and decent pay rises – to get back to the level of income they enjoyed in 2010, says the TUC.

The TUC living standards index will be updated every month following the latest available inflation and wage figures and is published here.

TUC general secretary Brendan Barber said: “Everyone has been getting poorer month-on-month for the last two years. But poorer families have been hit particularly hard by soaring food costs and utility bills.

“This squeeze on living standards is putting a terrible strain on family incomes and is dragging our economy down too.

“But rather than try to ease the burden, the government is making things worse with growth-choking austerity and attacking basic employment rights that will reduce pay further and make jobs more insecure.

“The government must to do everything in its power to encourage more business investment and decently paid jobs. This is the only way to get the country out of economic depression.”

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