Portsmouth has one of the UK’s sharpest gaps between pay and rising costs, as monthly spending jumps £760 since 2020
Portsmouth workers may be taking home more than they did five years ago, but new figures suggest the extra pay is being swallowed up before it reaches their pockets.
The study by Investing.co.uk compared average net monthly salaries with estimated monthly spending across UK local authority areas, using salary and household expenditure data from the Office for National Statistics.
It found that Portsmouth has seen one of the sharpest falls in the country, with local purchasing power down 31.1% since 2020. This places the city fourth in the UK overall and second in the South East.
In 2020, the average net monthly salary in Portsmouth was £2,004.93. Today, it stands at £2,265.14, meaning residents are taking home around £260 more a month on average.
But the rise in everyday costs has been much steeper. Estimated monthly expenditure in the area has increased from £1,186.99 in 2020 to £1,947.16 today, a jump of just over £760 a month.
That means typical monthly costs have risen by around £500 more than pay over the same period, helping to explain why many residents may feel worse off even though wages have gone up.
The study also looked at Portsmouth’s salary-to-consumption ratio, which compares average monthly pay with estimated monthly spending, showing how much room there is between what people earn and what they are likely to spend each month.
In Portsmouth, that ratio has fallen from 1.69 in 2020 to 1.16 today. This means average earnings still sit above estimated monthly costs, but by a much narrower margin than before. The financial cushion between pay and everyday spending has shrunk significantly.
Portsmouth fares worse than several nearby areas in the South East. Southampton has seen purchasing power fall by 23.6%, while Havant is down 25.2%, Gosport is down 20.2%, New Forest is down 22.2% and Winchester is down 24.1%.
Only Hart has seen a sharper fall in the South East, with purchasing power down 34.2%. Nationally, Portsmouth sits behind Hart, Denbighshire and Conwy for the biggest declines.
Toby Robinson, CEO of Investing.co.uk, says: “People often judge their finances by whether their salary has gone up, but Portsmouth shows why that can be misleading. Salaries in the city have increased since 2020, but residents still have much less spending power because everyday costs have moved so much faster.
“What stands out is the size of the gap between pay growth and expenditure growth. A 13% salary increase may sound positive on its own, but it is very difficult for households to feel better off when typical monthly costs have risen by 64%.
“That is what people really feel in their monthly budgets. It is not just about the number on a payslip, but whether there is anything meaningful left once rent, bills, food, transport and other essentials are covered.
“Portsmouth is also not just seeing a small squeeze. It has the second-sharpest fall in purchasing power in the South East and ranks fourth across the UK, which shows how severe the pressure has become for residents in the city.”l.