Cost of living

Cost of living

Work was undertaken to understand the potential impact of rising energy prices on household discretionary income in Southampton, which is the income remaining to spend, save or invest after paying essential bills, mortgage/rent, groceries, utilities and any other necessary expenses.

The estimates were developed by combining Experian MOSAIC data on typical household characteristics (including estimates of disposable income and household size), energy usage and energy pricing data from EON and the utility switchboard to create an energy bill baseline for households in the city. This baseline was then adjusted using the known increase in the energy price cap in October 2022 announced by the government. This forecasted increase in energy prices was then applied to household discretionary income to estimate the impact of rising energy prices on household income. Forecasts were adjusted to take into account the additional £66 per week government support.

It is important to note that all outputs are estimates and the modelling is only intended to provide a rough indication of the impact of rising energy costs and the characteristics of households estimated to be most affected. When interpreting the outputs, it should be noted that:

• Household characteristics and discretionary income bands are based on modelled Experian Mosaic data for ‘typical household types’ and do not necessarily reflect the actual characteristics of each household in the city
• Current energy bills were determined by number of bedrooms, but in reality usage is determined by a wider range of factors; including property size, insulation, usage, season, appliances, number of residents and payment method
• These forecasts do not account for potential changes in individuals’ behaviours; for example cutting back on electricity and gas usage as prices rise
• Other changes in discretionary income are not accounted for in the forecast, however evidence from ONS suggests that real pay is declining as a result of high inflation
• Only the impact of rising energy bills have been estimated; increases in other living costs such as food and fuel have not been considered in these estimates
• At present, up to £1,500 government support is available to help some households in this crisis. However, only £400 of this has been considered in the initial forecast as this is a universal offer. A number of households may be eligible for additional (up to £1,100) support in Southampton, but at present we have no robust way to apply this to the forecasts. Any changes to government policy will further impact on the reliability of these estimates
• Only the impacts on households have been considered. However rising energy costs will likely have far reaching impacts for schools, businesses, hospitals, care homes, etc. There may also be more indirect impacts on businesses through reduced household discretionary income / spending power

More information can be downloaded in the slide set below.

Also linked in the resources section below, is the latest data and trends about the cost of living from the Office for National Statistics. Exploring changes in the cost of everyday items and how this is affecting people.

If you are looking for further support, please visit Southampton City Council’s page on getting help with the cost of living.