LONDON: The fortunes of Britain’s workers have turned with the average household ending the financial year in April better off than they were in 2008, according to a leading think tank.
In a huge pre-election boost for the government, the Institute for Fiscal Studies (IFS) said average incomes in 2014–15 are around the same level as they were in 2007–08 – before the banking crisis precipitated a deep recession.
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A dramatic drop in inflation, modest wage rises and a steady fall in unemployment have raised household spending power, the thinktank said.
Falling prices of fresh food have played a big part, with figures showing the fastest monthly decline in February for at least eight years. Lower oil prices and a healthy coffee bean harvest, which last year was threatened by drought in Brazil, also dragged down average prices on the high street, as did cheaper electrical goods.
The British Retail Consortium said retailers reported overall shop prices falling for the 22nd month in a row, down 1.7% in February compared with a year ago. That followed deflation of 1.3% in January.
The IFS said thanks to falling inflation and an improving labour market, it forecast that real median household income will have grown by 1.1% in 2014–15, returning it to around its pre-recession (2007–08) level.
Surveys of the construction and manufacturing industries, which both faltered towards the end of last year, also indicated a return to healthy growth and a booming jobs market.
