costs soar, a report indicates.

An Ernst & Young report said rising household costs have outpaced wages, leaving an average British family with $300 less in discretionary funds to spend at the end of each month, The Daily Mail reported Friday.

After paying essential bills, a family with two children has just shy of $1,500 to pay for food and beverages; clothing, vacations and any school fees, the study said.

Monthly disposable income fell from roughly $1,630 in 2007 and from slightly more than $1,800 five years ago, the report said.

If the study had factored in food costs, the drop in discretionary spending would have been greater, the accountancy firm told the newspaper.

Even though average family income increased 3.7 percent to $7,500 a month, it hasn't kept pace with the 9.6 percent jump in costs such as mortgages, vehicle repairs, pension contributions and council taxes, said Jason Gordon, Ernst & Young's retail director.

If predictions of 40 percent fuel hikes come true, Gordon said,"consumers and consumer-facing businesses will face even bleaker times."