Fact Service January 2023

ONS: income inequality has increased

Household income inequality increased in the financial year ending (FYE) 2022, the ONS has found.

Income inequality, as measured by the Gini coefficient (the most commonly used measure), rose by 1.3 percentage points to 35.7% when comparing FYE 2021 to FYE 2022, up from 34.4%.

According to the ONS, the change was driven by a reduction in mean disposable income in the fifth poorest households (3.4%), attributed to reduced original income and cash benefits. Meanwhile, there was an increase in mean disposable income of the fifth richest households (3.3%), driven by increased original income.

Original income (before direct taxes and cash benefits) increased from 48.6% to 50.2% in FYE 2022, according to the ONS, reflecting greater inequality in earnings over this period.

Disposable income inequality for people in retired households increased by 1.3 percentage points to 32.1% in FYE 2022. The organisation adds that inequality of retired households is at its highest since records began, although it remains lower than for non-retired households (35.7% for FYE 2022).

Median household disposable income in the UK was £32,300 in FYE 2022, a decrease of 0.6% from FYE 2021, but median disposable income for the poorest fifth of the population fell by 3.8% to £14,500 in FYE 2022; reductions were also observed in mean original income and cash benefits.

In the same period, median disposable income increased by 1.6% to £66,000 for the richest fifth of people.