Affluent inflation myth dispelled

The affluent middle classes have seen earnings grow more than twice as fast as inflation over the last 10 years and have pulled further ahead of ordinary workers, research from the Halifax shows today.

The lender said that, contrary to popular belief, the inflation rate for the affluent was only slightly higher than the consumer prices index (CPI) over the period.

The affluent top fifth saw earnings rise by almost 43% while prices of things they typically buy rose 18.2%, slightly faster than the CPI rise of 17%. The average salary of the affluent is £35,875. The national average is £23,249, a rise of 39.5%.

Some sections of the media have claimed that the CPI figures do not represent the inflation rate faced by the middle classes who have bigger cars and houses than ordinary people so have reportedly suffered more from rising energy prices as well as big rises in private school fees.

The Halifax figures suggest that over the past year, affluent class inflation was 2.7%, only 0.3 percentage points higher than the CPI's 2.4%. During the past five years, affluent class inflation (10.3%) was only slightly ahead of CPI inflation (9.9%). The Halifax acknowledged that the affluent spend more on private school fees and university fees than the less well off.

"The affluent classes have seen their earnings rise by more than twice the increase in prices over the past decade. They have also become better-off compared to the typical household,".....continued below

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said Tim Crawford, group economist at Halifax Financial Services. The affluent spend a smaller proportion of income on food and housing than the less well off, so strong rises in these have helped keep affluent people's relative inflation down. Low inflation in clothes and entertainment, which they consume more of, also helped.

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