Middle class families' earnings rise twice as fast as their cost of living

Middle-class families have seen their earnings rise twice as fast as their cost of living over the past decade, research has shown.

The average family's income has increased by 42.8 per cent since 1997, to £35,875, according to Halifax Financial Services.

Over the same period the cost of the things they bought has increased by just 18.2 per cent.

Halifax says this is principally because affluent families spend proportionally less of their income on housing - eight per cent compared to an average of 11 per cent - so have been less affected as prices soared 41 per cent during the past 10 years.

They also spend less on food, alcohol and tobacco than other groups, at 13 per cent of their total income compared with an average of 15 per cent.

Prices of these items have risen by more than the inflation rate during the past five years.

They also spend more than average on items with low inflation rates, such as household goods, clothing and recreation.

Where middle-class families have suffered, says the report, has been over the cost of their children's education.

This has been the fastest growing price category of the past decade in CPI inflation, the Government's preferred measure.

Costs have soared by 87 per cent due to increased university tuition fees and private school fees.

Halifax said affluent families tended to spend more than twice as much on education as average households, at around £1,676 a year, 5 per cent of expenditure, against 2 per cent across all income groups.

Tim Crawford, group economist at Halifax Financial Services, said: "The affluent classes have seen their earnings rise by more than twice the increase in prices over the past decade.

"They have also become better off compared to the typical household."