Mullets, leg warmers and vinyl records; the 1980s have been making a comeback in a big way recently. One thing that hasn't returned with them? 1980s pricing.
The fun facts
Forty years ago, the average Brit working full-time was on an annual gross salary of £8,283. In 2024, and that same sum would barely cover half your annual rent. But it all works out the same when you adjust for inflation, right?
Well, no, actually.
I've been doing a bit of research recently, analysing the average prices of a few essential items, and how much they cost 40 years ago compared to today.
- Petrol is now 3.67 times more expensive than in 1984
- Eggs are 3.85 times more expensive
- A Ford Fiesta is 4.25 times more expensive
- Beer is 6.92 times more expensive
- Homes are 7.83 times more expensive to buy
- Fish ‘n' chips for one is a staggering 10.84 times pricier
- First-class stamps are 7.94 times more expensive
- And if you're renting, take a deep breath: average rentals are now 17.07 times more expensive than they were in 1984
While the Bank of England gives the official annual rate of inflation for this period as 3%, it's clear that it really does depend on what you're measuring.
Some items fell in value. Coffee, for example, has risen in price by less than 3% since 1984, representing a real-terms fall.
But other prices have risen by considerably more than 3% over the past 40 years. So let's look at what you'd need to earn today to have kept pace with some of those items.
The less fun facts: What's happened to your wages
- Let's look at a biggie: housing.
The average price of a home at the end of 1984 was just £36,105. Fast forward to today, and it is almost 8 times more expensive, at £283,000. (If it had increased by the Bank of England's official 3% rate of inflation, the average home would now cost £114,134.)
That means, if the average wage in 2024 had kept pace with 40 years of explosive house price growth, it would now be £64,690.
The reality? Government data shows that the median average UK wage (for full-time jobs across all sectors) is currently £34,944.*
Looked at another way, in 1984, homes were around 4.36 times the average salary. Today, it's a staggering 8.09 times the average salary.
It's no wonder, therefore, that the average first time buyer is now 6 years older than they were in 1984 (33 years in 2024 vs 27 years old in 1984).
- And the situation is even more dire if you're a renter.
In 1984, private renting cost an average of £74.75 per month across England as a whole. Taking the average gross salary as our starting point, monthly wages were 9.23 times higher than the average cost of renting somewhere to live. Plenty of extra pay packet to spend on your utility bills, food and living your life.
Compare that to today's ratio. In 2024, private rent for England as a whole is £1,276 per month. Some parts of the UK are far cheaper and, of course, London is far more expensive, but we'll stick with the average for now. If the average gross monthly wage is now £2,912, that means the cost of renting is now far, far more expensive as a proportion of your pay. Average monthly wages are now just 2.28 times higher than average monthly rental costs. You could have paid your rent nine times over in 1984 and still have a little left from your pay packet. Now rental prices average almost half the average pay packet.
* I chose to compare full-time salaries as I couldn't get data for the median average for full-time and part-time wages combined in 1984. The median average wage, combining full- and part-time salaries in 2024, if you're interested, is £28,584.
- So, what about living costs? How are we faring on those?
The differences here aren't quite as dramatic and, as I pointed out earlier, some items are actually cheaper as a proportion of our pay than in 1984. But it really does depend on what you personally consume.
- Let's take a refrigerator staple – milk.
In 1984, a litre of skimmed milk cost 15p, meaning that, should you wish to spend all your weekly wages on milk, you could have afforded 1,061 litres of the stuff. Today, at £1.36 a litre, you'd be able to buy just 494 litres. Still a lot of milk, sure, but far less than your wages would buy you in 1984.
- What about a great British tea-time tradition?
A fish ‘n' chip supper for one was just 83p in 1984. Today, according to the Office for National Statistics, the same portion would cost you a staggering £9! That's 10.84 times more expensive. A far cry from the 3% average inflation figure the Bank of England use and certainly more than our wages have kept pace with.
- And shall we wash it down with pint of beer in the local pub?
Bad news, I'm afraid. Not only are there far fewer pubs today, but it'll cost you far more to drink there. At £4.98 today vs 72p per pint in 1984, that's 6.92 times more expensive than 40 years ago. That's 221 pints of beer for your weekly salary in 1984 vs 134 pints for one week's average pay in 2024. (Please don't feel the need to test my maths.)
Looked at another way, if your wages had kept pace with the price of beer, the average full-time worker's salary would now be a cool £57,318.
It's perhaps no wonder that the great British pub is suffering.
Keeping up with price rises: the hack
While average wages haven't kept pace with the cost of many everyday items, especially housing, over the past 40 years, they're is one group of people who have more than kept up: investors.
The FTSE 100 index – the Financial Times Stock Exchange 100 Index (the “Footsie”) is the United Kingdom's best-known stock market index of the 100 most highly capitalised blue chips listed on the London Stock Exchange. It turned 40 at the beginning of 2024. Over the past 40 years, the annualised rate of returns from the FTSE 100 is just above 8%. That’s far above the Bank of England's official inflation rate of 3% over the same period, and higher even than many of the items we've looked at here, including house price inflation.
If you'd invested in a fund that tracked the S&P 500, (the stock market index tracking the performance of 500 of the largest companies listed on stock exchanges in the United States), you'd have done even better: it's average annualised rate of return over the past 40 years has been around 11%.
So, let's do some maths:
If you had invested £100 in 1984 in a fund that tracked the S&P 500, and continued to invest the inflation-adjusted equivalent once a year for the past 40 years (that's just £315.77 per year in 2024 terms), you could now be sitting on a tidy sum of £85,662.63**.
** Based on average S&P 500 returns of 11% annually over the period, compounded over 40 years, without fees or taxes deducted.
So the next time you're sipping on a £5 pint, remember that (1) you're not imagining it – money really doesn't go as far as it used to, and (2) there may be a way to level the playing field: investing.
Check out our Guide to stocks and shares ISAs if you're keen to explore more.
Warning: This article is for general information only and does not constitute advice. You are risking capital when you invest. The value of your investments (and any income you derive from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
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