Cost of living soars for low earners

People on low incomes are increasingly struggling to get by because of soaring inflation, research suggests.

A single person now needs to earn at least £14,400 a year in order to be able to afford a minimum standard of living, while a couple with two children must earn £26,900, according to the Joseph Rowntree Foundation.

In order to maintain an income of this level, a single person would have to earn £7.38 an hour, while a couple where both parents worked full-time would need to earn £7.60 an hour each, the foundation said. But both of these levels are well above on the minimum wage, which is £5.80 an hour.

The foundation blamed the situation on the fact that people on low incomes face a far higher rate of inflation than that reported by the consumer prices index (CPI). Researchers found the cost of a minimum budget had risen 38 per cent over the past 10 years, due in part to a 37 per cent increase in the price of food, a 59 per cent jump in bus fares and a 67 per cent rise in council tax. But CPI has risen 23 per cent in the past decade, they said. The Government's plan raise benefits in line with CPI rather than the retail prices index (RPI) suggests people on benefits would become increasingly worse off in real terms.

The study, carried out for the Rowntree foundation by the Centre for Research in Social Policy at Loughborough University, looked at how much money people needed in order to afford a minimum standard of living, as defined by the public. The minimum standard of living includes essentials such as food and housing, as well as things that enable them to participate in society, such as transport, social activities and a week's holiday in the UK each year.

The earnings needed to achieve this had risen by 6 per cent, or £1,600, for a couple with two children during the past year, the report added.