Pound’s value slashed by two thirds over 30 years

 
Ben Southwood
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THE POUND has lost two thirds of its value since 1982, a study revealed this morning.

Steady inflation over the past thirty years has seen the average price of a pint more than treble, from £0.73 to £3.18, gold more than quadruple in price, and the average house price go up five times, the analysis from Lloyds Private Banking showed.

This comes after the Bank of England allowed headline consumer price inflation to soar to a peak of 5.2 per cent after it launched its flagship quantitative easing money printing programme, which has seen it add £375bn to the country’s money supply since 2008.

To enjoy a millionaire’s lifestyle from 1982 would require more like £3m now, the bank said, even taking into account improvements in quality and technology.

“The value of money has fallen substantially over the past 30 years as retail prices and the cost of many everyday items has soared,” said Lloyds economist Nitesh Patel.

“Someone today would need nearly £300 to have the same spending power of £100 in 1982.”

Patel warned that even if the Bank kept inflation to target – which it does not think it will do for at least two years – the pound would lose half its value again during the next 30 year period.

The survey highlighted how fast certain prices had risen. A loaf of bread that cost just £0.37 in 1982 would now set a consumer back £1.24, while a dozen eggs priced at £0.73 30 years ago would now be sold for £2.82.

And house prices and gold have raced ahead even of the high average rate of inflation. Houses are worth an average of £273,700 today, up 505 per cent on 1982, when the mean house price was £45,211.

A troy ounce of gold fetched £203 thirty years ago, versus the £1,096 it would go for during 2012 – up 439 per cent over the period.

Commodities like sugar, carrots, coffee, butter, milk and sausages saw prices rise well under the average rate of price hikes, the data showed. Sugar saw one of the mildest rises, gaining a comparably modest 123 per cent between 1982 and 2012, Lloyds said, from £0.44 per kg to £0.98 per kg.