Middle classes 'better off'

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The average middle class family has seen its income increase by 42.8% since 1997 to average £35,875, but during the same period the cost of the things they buy has increased by just 18.2%, according to Halifax Financial Services.

The group said the rate of inflation faced by more affluent households was only slightly higher than the official inflation figure of 16.9% for the same period.

It said middle class households had been hit by rising education costs, which have been the fastest growing price category in CPI inflation, the Government's preferred measure, during the past decade, soaring by 87% on the back of increased university tuition fees and private school fees.

The group said affluent families tended to spend more than twice as much on education as average households, at around £1,676 a year or 5% of their total expenditure, compared with 2% of expenditure across all income groups.

But middle class families also spend less of their income on housing, which has seen the second biggest jump in prices, rising by 41% during the past 10 years.

Affluent households spend more on housing in absolute terms at an average of £2,692 a year compared with £2,142 across all income groups, but as a proportion of their income they spend only 8% on housing, compared with an average of 11%.

They also spend proportionately less on food, alcohol and tobacco, at 13% of their total income compared with an average of 15%.

This also helps to keep down their personal rate of inflation as spending on these items has risen by faster than average during the past five years.

At the same time the middle classes spend more of their money on items with low inflation, such as household goods, clothing and recreation, at 32% of their income, compared with 31% for the average household.