At long last, the economy looks to be back on surer footing. Confidence is higher, the housing market is buoyant, and wages have finally risen to match inflation for the first time in six years. But the political wrangle in the build up to the next election is likely to be about living standards.
Though many of our costs dipped as a result of the financial crisis, we’re still likely to find ourselves much worse off than we did at the start of the Coalition government. A new infographic from Vouchercloud shows how we’re trailing in the wake of rising costs.
The most startling rises have occurred in housing, education, and energy. When adjusted for inflation, average gas bills have more than doubled in the past decade (+108%), while electricity bills have hiked by 53%. Petrol prices took a hit during the recession but have made a strong recovery to reach a third above their 2003 levels (+34%). And two rises in tuition fees, to £3,000 in 2006 and £9,000 in 2012, have made the costs of university unrecognisable from a decade ago.
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How does this compare to what we earn? In real terms, wages have shown barely any progress over the last decade, as the financial crisis suppressed the ability for earnings to grow. There are now signs that earnings are beginning to regain some lost ground, but persistant above-inflation rises in essential costs such as energy and transport have left a hefty dent in the pocket of most average earners.
Mercifully, consumables – including food prices – have remained relatively meek. But those whose earnings have not risen in line with inflation over the last few years will still have felt the pinch from their grocery shopping. And what this graph doesn’t show is the decline in the returns offered by savings accounts in recent years, which has resulted in further real-term losses for diligent consumers.
It remains to be seen how prices will adjust when interest rates begin to rise, but it will be particularly interesting to note how the cost-of-living crisis is used rhetorically when political debate heightens ahead of the next election.