Friday, 31 January 2014

Household income squeeze

Data from the Institute for Fiscal Studies (IFS) show that median income is more than 6% lower than the peak in 2007-08, ahead of the financial crisis, and that income is unlikely to recover to its pre-crisis level by 2015/16. The IFS said better-off households had seen bigger proportionate falls in incomes while the poor had experienced higher inflation than the rich over the period. The CPI has increased 20% since 2008 but the prices of food and energy – two things that poorer households spend a larger slice of their income on – have increased 30% and 60% respectively. Meanwhile, record low interest rates have seen mortgage costs fall – something that has not helped the relatively poorer and younger people who rent their homes. The IFS’s Abi Adams said: "Differential inflation has largely undone what would otherwise appear to be a significant reduction in inequality

with courtsey of Financial Times 

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