Rent and car buys hike family spend

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Published: Tuesday 2nd December 2014 by The News Editor

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Families’ spending increased by £16.30 a week last year as more money was swallowed up by rents and motorists started to trade up on the cars they had been making do with during the financial downturn, an official report has found.

Average weekly household spending increased to £517.30 in 2013, compared with £501 in 2012, with the biggest chunks of expenditure being taken up by housing, fuel and power, followed by transport, recreation and food, according to the Office for National Statistics (ONS).

The detailed report reveals that UK families’ typical weekly spend included £2.20 on pet food, £1.80 on chocolate, £2 on women’s shoes, £6 on mobile phone fees, £4.20 on takeaways, £4 on wine which was consumed at home, and £1.10 on live entertainment last year.

The lowest earning 10% of households spent an average of £189.80 per week on goods and services, while the highest earning 10% of households spent £1,119.50 per week typically.

The report also highlighted north/south and rural/urban spending divides. Household spending was around £160 a week more expensive for families living in the South East than those in the North East, while families living in rural areas face paying almost £70 a week more on their general outgoings than those in towns and cities.

Across the UK, while household spending has increased on 2012 when inflation is taken into account, it remains lower than in 2006, when households spent an average of £539.80 per week just before the financial downturn took hold.

Families spent more on housing, fuel and power last year than on anything else, at £74.40 a week on average. This was followed by transport-related spending, which amounted to £70.40 each week.

The ONS said that increased spending seen in the housing category, which does not include mortgages, can partly be explained by an increase in the number of households renting in recent years. The proportion of households renting increased from 29% in 2006, to 35% in 2013.

The housing category spending includes electricity, gas and other fuels at £26.50 a week and rentals for housing at £32.00 a week after housing benefit and other allowances, £7.10 on maintenance and £8.70 on water supply and other charges. These figures are averaged out across all households.

Looking only at households who rent their home, their rental cost is £92.10 per week typically. Families with a mortgage spend £145.40 a week on this on average. Mortgage payments are included separately in an “other expenditure items” category.

Meanwhile, the report said there are signs that some “pent up demand” from people waiting to buy a new car was unleashed last year, which has helped to push up average transport costs.

It said: “This may have fuelled the increase in sales of new cars seen in 2013, with consumers replacing vehicles they kept hold of through the recent downturn.”

Between 2012 and 2013, fuel prices decreased slightly, although spending on petrol and diesel still takes up about one third of transport spend.

Weekly spending on transport is made up of £21.10 on the purchase of vehicles, £15.30 on transport services such as rail, tube and bus fares and £34.00 on the operation of personal transport such as petrol, diesel, repairs and servicing. Around £15.70 a week is spent on petrol while around £7.60 a week goes on diesel.

Giles Horsfield, editor of the ONS’s Family Spending report, also said it is “interesting that spending on recreation and culture has held up” in recent years despite pressure on budgets.

Recreation and culture was the third highest expenditure category with around £63.90 spent on it a week last year by families.

This includes spending on TVs, computers, newspapers, books, leisure activities and package holidays. Around £21.00 a week was typically spent on package holidays abroad last year, compared with £1.40 a week on package holidays within the UK.

Households spent £2.30 a week last year on trips to the cinema, theatre and museums, £5.50 on sports and £2.30 on games, toys and hobbies.

Mr Horsfield said that the desire for some escapism could be one interpretation for why this category has remained steady during the financial downturn.

Average weekly spending on food and non-alcoholic drinks in 2013 was £58.80. £15.60 of this was spent on meat and fish, £4.30 on fresh vegetables, and £3.30 on fresh fruit.

Mr Horsfield said there are signs of a decrease in food spending, which could be a sign that households are doing their best to be economical and taking advantage of supermarket price wars.

The figures also show that £22.60 a week on average was spent by households on clothing and footwear, while £12.00 was spent on alcohol and tobacco.

Households in Scotland spend around £8.10 a week on alcoholic drinks, while those in Northern Ireland spend £7.90, those in England spend £7.60 and those in Wales spend £6.40 typically.

Rural households spent around £550.50 a week between 2011 to 2013, compared with £481.70 a week typically spent by those living in urban areas. Much of this spending divide is due to families living in the countryside facing shelling out more on transport.

Families living in the countryside spend around £85.50 a week on transport, while urban households pay £61.40 on average. The report suggested a number of possible reasons behind the higher transport costs, including better public transport links in urban areas and people living in the countryside having to make more frequent trips to reach local amenities.

Here is how weekly spending added up for the average UK household in 2013, with the figures expressed in cash terms and as a percentage of total spending:

:: Housing, fuel and power (excluding mortgages), £74.40, 14%;

:: Transport, £70.40, 14%;

:: Recreation and culture, £63.90, 12%;

:: Food and non-alcoholic drinks, £58.80, 11%;

:: Restaurants and hotels, £40.40, 8%;

:: Miscellaneous goods and services, £ 39.10, 8%;

:: Household goods and services, £33.10, 6%;

:: Clothing and footwear, £22.60, 4%;

:: Communication, £14.50, 3%;

:: Alcoholic drinks, tobacco and narcotics, £ 12.00, 2%;

:: Education, £8.80, 2%;

:: Health, £6.20, 1%;

:: Other expenditure items, £73.00, 14%;

:: Total spending, £517.30.

And here is the average weekly spend by households across the UK by region combined over the years between 2011 and 2013, according to ONS data:

:: North East, £424.60;

:: North West, £458.70;

:: Yorkshire and the Humber, £431.10;

:: East Midlands, £466.70;

:: West Midlands, £455.50;

:: East, £523.40;

:: London, £579.60;

:: South East, £585.40;

:: South West, £518.20;

:: England, £505.40;

:: Wales, £438.80;

:: Scotland, £449.00;

:: Northern Ireland, £484.70.

Published: Tuesday 2nd December 2014 by The News Editor

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