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Pound worth 90% more 40 years ago

THE spending power of money has fallen by more than 90% in the last 40 years, research has shown.

More than a tenfold increase in retail prices means that £9.48 in 1973 would have the same spending power as £100 in your wallet today. And £1 million in 1973 is the equivalent of £10.5m in 2013, according to Lloyds Bank's analysis of Office for National Statistics (ONS) figures.

However, average wages have actually grown by more than 12 times in the same period. The average weekly wage in 1973 was £41.90 for a man and £23.10 for a woman, compared to £517 combined for both in 2013.

Overall, the value of money has plummeted by 91% over the last 40 years, Lloyds' analysis of the Retail Prices Index (RPI) and other data found.

The price of a pint of lager is 20 times what it was 40 years ago, having risen from just 14 pence then to £2.87 now while a loaf of bread is now priced at 12 times what it was in 1973.

A pint of milk has risen around seven times over the period, from six pence to 46 pence.

Meanwhile, the price of putting fuel in your car has risen 17 times since the early 1970s.

Taking into account overall inflation over the last four decades, some household items such as apples, milk, carrots and sugar, are actually cheaper in real terms than they were in 1973.

Ashish Misra, head of investment policy at Lloyds Bank Private Banking, said: "There is no doubt that the value of money has fallen dramatically since 1973 as a consequence of the substantial rise in the level of prices.

"It is likely to be reduced significantly further over the next 40 years even if inflation is kept under control."

Looking to the next 40 years, if retail prices increase in line with Government targets, this could mean that £311 on a shopping spree in 2053 will get you as far as £100 would today.

Lloyds based this calculation on estimates that a 2.8% rise in RPI inflation would be consistent with the Government's 2% target for consumer price inflation.

Its prediction means that someone would need to earn over £3m in 40 years' time to enjoy the same lifestyle as someone who now has £1m.

Contextual targeting label: 
Finance

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