Typical disposable incomes for non-retired households reached a new high last year off the back of strong employment growth and low inflation, the Resolution Foundation said today (Wednesday) in response to the latest ONS income and inequality data, which refer to the financial year 2016-17.
But the depth of the post-crisis squeeze means that typical disposable incomes for non-retired households in 2016-17 were just 2 per cent higher than they were back in 2006-07. In contrast, typical incomes for retired households increased by 18 per cent over the same period.
The data also points to a fall in income inequality over the last decade, but with a small uptick in the last year. However, the ONS rightly cautions that this data does not fully pick-up income changes for the very rich and suggests that a clearer picture on inequality will be provided by the publication of the Department for Work and Pension’s income survey data later this year. This welcome advice chimes with recent recommendations from the Resolution Foundation.
Adam Corlett, Senior Economic Analyst at the Resolution Foundation, said:
“The solid, broad-based income growth Britain experienced in 2016-17 means that non-retired households have finally got back to where they were a decade earlier in terms of incomes, though this recovery has still been the weakest in living memory.
“This welcome income growth was driven by rising employment and low inflation. But with pay and benefits now falling in real terms and employment growth at an end, Britain’s living standards recovery may have proven short-lived.
“The Foundation has long argued that there is better data available for measuring inequality in Britain, and it’s good to see the ONS explicitly agreeing. Politicians should heed this official advice when making claims about inequality trends.”