- The cost of utilities has risen 139% over the last 20 years, almost three times the general rate of inflation.
- Inflation has seen the cost of clothing and shoes halve for the average household.
- The new research is based on the inflation experienced by typical households and Office for National Statistics data.
LONDON — The cost of utilities in the UK has risen by almost three times the general rate of inflation over the past 20 years, while that of clothing and shoes has halved, according to new research.
Investment group Tilney’s Household Inflation Index shows that between 1997 and 2016 inflation for a typical household’s entire basket of goods was 50.7%.
The cost of utilities, however, jumped by 139%, while the cost of clothing and shoes fell by 49%, largely thanks to the rise in products being manufactured more cheaply overseas.
“Inflation is often seen as a single figure affecting all households in a uniform way, but price rises and falls have varied dramatically across different goods and services over the last 20 years,” said Andy Cowan, head of financial planning at Tilney.
The findings come in the wake of news that two of the so-called “Big Six” household energy firms are set to become five, after SSE and Npower on Wednesday announced plans to merge. The proposed merger follows the government’s promise to crack down on “rip off” energy prices with a price cap, and to improve competition and value for money in the sector.
According to Tilney’s research, the price of alcohol and tobacco also soared by 165% over the period, the only rise in the study greater than utilities.
The top 10% of households — those with an income of more than £78,500 per year — experienced “considerably higher overall inflation” and were exposed to a “much greater income tax burden” than most.
“These households have needed to see their savings and investments generate a return in excess of 64% over the last two decades, just to stand still in real terms after the impact of inflation,” said Cowan.
The report, which used Office for National Statistics data, defined a typical household’s income as between £26,900 — £30,000.