Inflation Leaves Households on £60,000 a Year Struggling | The Real Impact

While there's been a lot in the news about how inflation is having the greatest impact on the lowest-income households, higher earners are certainly not immune to rising prices. In fact, even those earning £60,000 a year are likely to be making cutbacks or else face going into debt.

NimbleFins analysis of data from the ONS inflation calculator shows that households with take-home pay of £3,575 per month after taxes (the equivalent of £60,000 per year pre-tax) now spend more than they earn. Average spending for the main budget categories in April 2022 hit £3,747 per month for those with take-home pay of £3,575. This means these households would now spend £172 per month more than they earn.

These figures apply to households with cars, but does not include costs for items such as childcare, education and tobacco as they may not be necessary expenses for some households. Households with these expenses would be further in debt each month.

Unless they make cut-backs and changes to their lifestyles, they face mounting debt. Over the course of 12 months, households would rack up over £2,000 of debt if they don't make any cutbacks or changes to their lifestyles like postponing the purchase of clothing or shoes or holidays.

Average monthly spending for those earning £60,000 pre-tax annual income (£3,575 post-tax per month):

CategoryAverage Monthly Spend for £60k Income
Personal care items£72.37
Other non-grocery items (e.g. cleaning products)£23.55
Homeowner housing costs£980.99 (or £955 for rent)
Home maintenance costs£12.10
Council tax£147.07
Water and sewage£32.00
Mobile phones£34.49
Other communication costs (e.g. internet)£47.49
Bus fares£35.27
Train fares£14.89
Petrol or diesel£102.48
Other motoring costs£129.58
Purchase of vehicles£213.15
TV licence fees and media subscriptions£24.67
Eating and drinking out£281.84
Entertainment and days out£51.16
Gardening, plants and flowers£24.55
Games and toys£46.01
Electrical items£71.77
Other leisure items£150.64
Clothes and footwear£161.30
Insurance and financial services£127.97
Other expenditure£-
**Total£3,746.85 **

The personal inflation rate was 7.0% for a household with a median income of £3,575 after tax per month and average spending across all categories in April 2022, according to the ONS inflation calculator.

Biggest Contributors to Cost-of-Living Increases from April 2021 to April 2022 for household income of £60,000 (pre-tax)

The biggest contributor to cost-of-living increases for households earning £60,000 a year was energy, followed by homeowner housing costs (or rent), petrol or diesel, the purchase of vehicles and food and drink.

chart showing inflation impact for income of £60k