Standard of living falling in UK
6th August 2010
Inflation and wage freezes have contributed to a drop in the standard of living experienced by ordinary people in the UK.
Automated payments firm VocaLink carried out research which it says shows the spending power of ordinary households has been eroded because of the rising cost of basic goods and essential services. Experts say cashing in life insurance policies early can sometimes offer a way out of the poverty trap.
People's wages increased by an average 0.8% last month, while June wages were up by just 0.6%, the group said. Because inflation rates are much higher than this, salaries are effectively being cut.
VocaLink's Marion King said: "Since October 2009, prices have been going up faster than people's take-home pay, which is worrying for the average family on a tight budget. The gap has narrowed a little this month but the difference between annual growth in inflation and the VocaLink Take Home Pay Index is 2.4%."
Douglas McWilliams, who runs economics consultancy Cobra, said: "The VocaLink take-home pay index continued the recovery that began last month after the record lows seen in May. Inflation is likely to remain elevated over the coming months due to the impact of increases in indirect taxes, oil prices and the depreciation of sterling."
Copyright © Press Association 2010
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