Real incomes of wage-earning households have returned to growth
The Labour Institute for Economic Research has published new calculations on the development of purchasing power for seven representative household types over the period 2012–2017, as well as forecasts for the current and following year. The calculations take into account changes in taxation, social security contributions, social benefits, housing costs, and household-specific inflation rates.
For wage-earning households, the previously slow growth in nominal incomes is expected to accelerate in 2018 and 2019. In contrast, for households relying on transfer income, purchasing power growth has been stronger in earlier years, but in 2018 and 2019 their real disposable incomes are projected to grow modestly or decline.
The weakening of purchasing power is explained not only by slow growth in benefit income but also by rising living costs. In particular, rents increasing faster than owner-occupied housing costs reduce the purchasing power of low-income households relative to others. (AI translation)
