Whether it’s spending money on the big food shop or treating yourself to a cinema trip, disposable income is important in allowing us to relax and enjoy life’s pleasures outside of work.
With the cost of living on the rise, our income is already stretched to cover our needs and wants. But how does this compare to previous generations?
Brit’s would be £25,397 better off each year if salaries increased at the same levels as inflation since 1987
Between 1987 and 2020 the mean disposable income has increased by 64% from £19,221 to £31,464 on average per year. But how much have our salaries increased by, and how does this compare to inflation rates?
|
Year |
Cumulative inflation from 1987 |
Actual disposable income (per year) |
Inflated disposable income (per year) |
|
1987 |
4.15% |
£19,221 |
£19,221 |
|
1997 |
2.20% |
£23,373 |
£30,031 |
|
2007 |
2.39% |
£30,506 |
£38,961 |
|
2017 |
2.56% |
£30,384 |
£51,785 |
|
2020 |
1.74% |
£31,464 |
£56,861 |
If salaries were in line with inflation over the last three decades, the mean disposable income would be a staggering 81% more at £56,861 on average. That means, we’re £25,397 less better off each year when we compare against inflation and the cost of living.
How does the cost of living and life’s necessities compare to the level of inflation since 1987?
Looking at current levels of disposable income, against current prices of essential items (including housing, travel and food) we can see the rate at which our income is increasing does not match the rate of the increasing cost of living.
Back in 1987, house prices were just £38,662 on average, making it easier for first-time buyers to get on the property ladder. House prices are now around six times more at £237,350 on average, which is a huge 514% increase.
