Money’s too tight to mention

Rising prices have reduced the average household’s standard of living by £5 according to various news sources today. The data for January 2008 shows how rises in the prices of food, petrol, transport and household bills have affected real incomes.

An article in The Telegraph gives nominal pre-tax income growing by £22 per week, offset by a £27 increase in various spending costs.

According to the Press Association’s ,

The average household had just £138 a week left in January after meeting all their essential costs, such as food, clothes, housing, bills and transport, according to the Centre for Economics and Business Research (cebr).

Cebr said earnings were 3.8% higher in January than a year earlier, but taxation remained high, leading to a rise of just 2.6% in people’s take home pay. The amount paid in income tax and National Insurance rose by 7.8% during the year, which the group attributed to more people falling into the higher income tax bracket.

Will Alistair Darling respond to the final point (fiscal drag) by increasing income tax brackets by more than inflation in the upcoming budget? With the fiscal rules already in disarray, this is unlikely.