Money News

UK households need to find an extra £46bn just to stay still

Thursday 20 October, 2011

By Martin Fagan

Rising inflation means Brits need to spend an extra £736 just to maintain the same living standards as last year.

UK households need to find an extra £46billion just to maintain the standard of living they enjoyed 12 months ago, according to research by MGM Advantage.

To maintain the same lifestyle as a year ago, the 62,435,709 people living in the UK would each need to spend an estimated additional £735.74 each.

The retirement income specialist’s research was in response to the latest annual consumer price index (CPI) inflation rate reaching a three-year high of 5.2%.

MGM Advantage estimates that a typical UK household would need to spend an extra £1,768.15 a year to maintain their standard of living from a year ago. The corresponding figure for households where the main occupant is aged 65-74 is £1,104.04, and for older households (75-plus) it is £813.90.

"The latest CPI rate of 5.2% will have a significant impact on the finances of retired people,” said Aston Goodey, sales and marketing director, MGM Advantage.

“Given the fact that people are living longer and their retirement incomes are shrinking, many more people face an uncertain future.”

Economists say the recent spike in inflation was caused by rising energy bills, petrol prices and food prices.

The Office of National Statistics (ONS) said that the average household electricity bill rose by 7.5% between August and September, while the average gas bill rose by 13%. The price of clothing also rose by over 4% in the one month period.