UK consumer spending power has plummeted due to the surge in living costs, according to research by accountants Ernst & Young. The Annual Discretionary Income Study shows the average household is 15% worse off than five years ago.
The research shows the typical family has less than 20% of its income remaining after household bills and tax, compared to 28% five years ago. Ernst & Young says that soaring fuel prices and rate rises also mean “the worst could be yet to come”.
The report shows that average monthly energy bills have risen by 110% since 2003 to £95.80. It also found that average monthly mortgage payments are up by 78% to £735. However, increased competition has lowered the cost of fixed line telephone costs.
Ernst & Young director of retail Jason Gordon says the steep decline in discretionary income means consumers are no longer in a position where they can spend as freely as in the past.