Brits would be £25,397 better off each year if salaries increased at the same levels as inflation since 1987

Savoo has delved into historical data covering the last 35 years to find out how disposable income has evolved compared with the cost of living and inflation rates, to show if we really are better or worse off.

Whether it’s spending money on the big food shop or treating yourself to a cinema trip, disposable income is important in allowing us to relax and enjoy life’s pleasures outside of work.

With the cost of living on the rise, our income is already stretched to cover our needs and wants. But how does this compare to previous generations?

Brit’s would be £25,397 better off each year if salaries increased at the same levels as inflation since 1987

Between 1987 and 2020 the mean disposable income has increased by 64% from £19,221 to £31,464 on average per year. But how much have our salaries increased by, and how does this compare to inflation rates?

If salaries were in line with inflation over the last three decades, the mean disposable income would be a staggering 81% more at £56,861 on average. That means, we’re £25,397 less better off each year when we compare against inflation and the cost of living.

How does the cost of living and life’s necessities compare to the level of inflation since 1987?

Looking at current levels of disposable income, against current prices of essential items (including housing, travel and food) we can see the rate at which our income is increasing does not match the rate of the increasing cost of living.

Back in 1987, house prices were just £38,662 on average, making it easier for first-time buyers to get on the property ladder. House prices are now around six times more at £237,350 on average, which is a huge 514% increase.

House prices are now six times more expensive, whilst disposable income has only increased by 64% on average, with a total change of £12,243. Based on inflation, the average house price would be £114,374 which is 70% less than current prices.

Fuel prices are at an all-time high (+200%) since 1987

In October 2021, the average price of unleaded petrol reached a record high of £1.44 per litre amid oil market pressure. The new high is 30p more than a year ago, 64p more than two decades ago, and £1.06 more than in 1987.

To fill the average-sized fuel tank now will cost a whopping £64.80 on average, compared to just £15.20 in the eighties. With today’s money, you could fill up your car more than four times based on the price of petrol 34 years ago.

Based on inflation, the price of petrol should sit just under its 2020 price (£1.14) at £1.12 per litre, making it one of the smallest differences between the cost of living now vs the cost based on inflation rates.

The price of a single bus trip has increased 417% over the last 30 years, meaning Brit’s are spending £1.15 more for every journey based on inflation rates

For most of the country, the price of a single fare bus ticket is £2.68 on average depending on the distance. That’s 417% more than ticket prices in the late eighties when a single bus trip would cost just 52p on average.

If we compare with inflation, the price of a single bus trip should cost £1.53, meaning we could be spending over £1 for every journey we take!

Life’s pleasures in the 20th century have overtaken inflation rates, whilst our disposable income has remained disappointingly stagnant

Over the last few decades, our disposable income has grown at a slower rate against the increasing cost of living for the things we purchase to enjoy ourselves, from a pint of beer to a cinema ticket.

To get our movie fix in the 80s, which saw the release of Ghostbusters, Top Gun and Labyrinth, a single cinema ticket would cost just £2.15, up from 83p 10 years prior.

In today’s streaming era, the cost of a cinema ticket starts at £6.75 on average, which is 214% more than 30 years ago.

Based on inflation, the cost of a cinema ticket would be around £6.36 which is just a 39p difference compared to current prices.

Brit’s could be spending £1.03 for every pint of beer if prices since 1987 were in line with inflation rates

To enjoy a pint in 1987 would have cost as little as 93p, which is 306% less than today’s price of £3.78 on average. But how big really is the difference between the average cost of a beer and how much it should be against inflation rates?

If we base the increase on inflation, to buy yourself a beer should cost 37% less at £2.75 a pint on average. With every pint costing £1.03 more than it should do based on inflation, you could be racking up an impressive pot of money over a number of years.

Vinyl and CDs are 18% more affordable compared to 34 years ago

Back in the eighties, the only way you could enjoy music was to buy a physical copy. In 1987, it would have cost you £12.32 to listen to your favourite album and prices peaked in 2004 when it would cost £13.45 on average.

Today, given streaming is the most popular way to listen to music, the price of physical copies are 16% cheaper at £10.10 on average.

If we look at inflation, the price of a vinyl record would be £36.45 on average which is 261% less than the current average price, so now is the perfect opportunity to expand your collection.

Looking at the findings, it’s clear that disposable income has increased at a slower rate over the last three decades compared to the cost of living, which means we’re now paying out more for everyday necessities and life’s pleasures than we were before.