Minimum cost of living rising at twice the rate of inflation

The minimum cost of living, as perceived by members of the public, is rising at twice the rate of inflation, according to a new report published by the Joseph Rowntree Foundation.

According to the report, the minimum income standard for Britain in 2009, which represents the income needed to afford a minimum socially acceptable standard of living in Britain, has risen by 5%, contrasting with official inflation figures of 2½% (CPI) and -1% (RPI). This means that a worker whose earnings are linked to the RPI could be 6% worse off this year, relative to the minimum cost of living.

The report reveals that items that make up a large part of a minimum budget, such as food, have risen sharply in price. However, some items that have got cheaper, such as paying a mortgage and running a car, are not part of a minimum budget.

The research found that a single adult with no dependents now needs to earn at least £13,900 gross a year to reach the minimum standard. This represents a £500 rise from 2008 when the study was last conducted. The report found that nearly half of this rise was allocated to covering the rising cost of food.

In addition, the report shows that around a quarter of Britons are living below the minimum income standard for Britain – a proportion that seems likely to increase given rising unemployment figures.

Co-author of the report, Donald Hirsch from the Centre for Research in Social Policy at Loughborough University, said:

“In tough economic times, a growing number of people will ask themselves whether they have enough income to afford a minimum acceptable standard of living. Many fall out of work. More find it hard to make ends meet. People who have taken for granted a given standard of living suddenly have their expectations shattered. In such circumstances, a benchmark like the minimum income standard for Britain can help society to keep sight of what levels of income it finds unacceptable.”