Rising cost of living hits families hard

| July 10, 2012 | 0 Comments
Rising cost of living hits families hard

A new study suggests that a family with two children now needs to earn £36,800 a year in order to achieve a “socially acceptable” standard of living.

A quarter of the UK population now live below the minimum income standard (MIS), an increase of three million since 2008.

The MIS study, which was commissioned by the Joseph Rowntree Foundation, bases the standard on having enough income to eat a balanced diet, run a car and heat the home.

Family incomes have been eroded over the past few years by rising childcare cost, higher transport costs because of soaring fuel prices, and cuts to benefits.

Researchers from the social policy research unit at Loughborough University questioned 21 focus groups made up of working families, pensioners and single people of working age.

In order to reach the MIS, the study found that a couple with two children needs to earn at least £18,400 a year each before tax; single people need £16,400 a year, a lone parent with one child needs to earn £23,900 and a retired couple need annual income of at least £12,000 each.

Julia Unwin, the Joseph Rowntree Foundation’s chief executive, said: “Parents facing low wages and pressure on their working time have little prospect of finding the extra money they need to meet growing household expenses.

“Many working people face the risk of sliding into poverty.

“It illustrates how anti-poverty measures are needed to address not just people’s incomes but also the costs that they face.”

The study suggests that the new Universal Credit system, which will be launched by the government next year, will have a strong influence on the ability of households to reach MIS.

Oxfam’s director of UK poverty, Chris Johnes, said: “These figures are a warning that we could see a generation of families that have to go without essentials.”

A separate study found that people living in rural areas are being particularly badly affected by the rising cost of living.

A report, by rural insurer NFU Mutual, suggests that the cost of living in rural areas is increasing nearly twice as fast as the average inflation rate.

Including the cost of fuel, electricity and groceries, rural inflation reached 7.7 per cent over the past year, compared with a national average of 4.3 per cent.

The difference is largely due to increased fuel and electricity prices, which have a bigger impact on rural households.

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