A working couple with two children need to earn £36,800 per annum simply to cover the family’s basic costs, a report by the foundation has found.
“The squeeze in living standards caused by the combination of rising prices and stagnant incomes is hitting people on low incomes hard,” said author Donald Hirsch, an academic from Loughborough University.
Over the last 10 years the cost of a “minimum” basket of goods has rocketed by 43 per cent, Hirsch found – higher than the 27 per cent increase in the wider consumer price index.
“In the future, if rising world demand continues to push up commodity prices, minimum costs could again rise faster than the official inflation rate in the UK,” Hirsch added.
The lot of families has declined more sharply than that of child-free individuals, the report found, due to reductions on tax credits covering childcare. Furthermore, child benefit has been frozen.
“For families who need to use childcare, it has substantially reduced the incentive to work on relatively low pay,” Hirsch said.