Londoners on the lowest incomes would need to spend 24% more per week to achieve the same standard of living that they had before the pandemic, new research by Trust for London and WPI Economics finds.
This includes £15 extra a week on food and non-alcoholic beverages and £28 extra a week on energy.
Londoners on the highest incomes, by contrast, would need to spend just under 20% more per week to achieve the same standard of living as pre-pandemic.
And while low-income households’ increase in spending is made up of mostly essential spending – such as food and energy bills – the increase for those on higher incomes is made up of a larger portion of what can be thought of as non-essential spending, such as restaurants and hotels.
The new figures come from London’s Cost of Living Tracker – a project by Trust for London and WPI Economics, which breaks down what rising costs might mean for different demographic groups.
The research findings show how much goods and services bought by different types of households before the pandemic would cost now, including housing costs. This helps us to understand which groups will be most likely to have had to compromise their standard of living.
The research also finds that older households face higher price rises than younger ones.
To achieve the same standard of living as pre-pandemic, older households would have to pay 25% more per week – compared to 18% for the youngest households.
However, younger households’ spending is mainly made up of essential spending that may not be able to cut back on. For example, more than a quarter of the youngest households’ weekly spending before the pandemic was on rent.
- Households in London on the lowest incomes have been the most affected by rising prices since Spring 2022 – with those on the highest incomes the least affected.
- Households on the lowest incomes in London would need to spend 24% more per week to achieve the same standard of living that they had before the pandemic. This is almost 5 percentage points higher than the increase for households on the highest incomes.
- Older households (those headed by someone 65 or older) would have to pay the biggest increase of all age groups to achieve the same standard of living as they had before the pandemic.
- To buy the same basket of goods as before the pandemic, older groups would have to pay 25% more. This is compared to 18% for the youngest households – those headed by someone aged 20-35.
- The biggest contributors to this rise in price for older households are energy bills and food. To use the same amount of energy as pre-pandemic, older households would have to spend £30 extra per week – more than doubling their costs.
- For younger households, rents have contributed significantly to rising costs. Pre-pandemic, more than a quarter of young households’ spending went on rents (29%) – far higher than any other age group.
- Households in poverty and those not in poverty would see a very similar increase in price to achieve the same standard of living as they had before the pandemic. Both would have to pay around 21% more for the same basket of goods they purchased before the pandemic. However, the make up of these two groups’ basket of goods and services is very different.
- Almost half (48%) of the expenditure for households in poverty is taken up by rents, food and non-alcoholic beverages and energy bills. This contrasts with less than a quarter of the expenditure (23%) for households that are not in poverty.
- The 21% increase in price of a household in poverty’s basket of goods is mainly made up of essentials – such as energy bills (which contribute 6% to the total increase) and food (4%).
- Households not in poverty however would see a large proportion of their increase in spend made up of non-essentials, such as hotels, restaurants, recreation and culture, which contribute 5% to the total increase. However, the biggest contributor to rising costs for this group is still energy costs.