UK HOUSEHOLDS are spending over half their monthly budgets on basic living costs, numbers showed this morning, due to rapid inflation over the past 10 years.
Basic needs – shelter, food, water and heating – take up 24.3 per cent of monthly expenditure, Halifax said. Combined with transport, health and personal care, basic needs took up 51.9 per cent of expenditure, an eight per cent climb from the 48 per cent recorded in 2003, the research showed.
Transport rose to become the largest single item in the basket, Halifax said, taking up 14.8 per cent of a representative household’s spending in 2013.
“The rising cost of basic goods and services has left people with less to spend each month once essentials like food and shelter have been accounted for,” said Halifax director Anthony Warrington.
By contrast, the fraction of expenditure going to discretionary spending has dropped sharply, 13.5 per cent less of spending going to recreation and culture in 2013 than in 2003. The share going to restaurants and hotels also dived, from 13.5 per cent to 11.7 per cent – a dip of 13.3 per cent over 10 years.
This was mirrored by a dramatic rise in the fraction of the goods basket devoted to housing and utility bills. The proportion of spending on housing, water, electricity, gas and other fuels rocketed up from 10.4 per cent 10 years ago to 13.7 per cent this year – a jump of nearly a third.
Recent figures have shown real household expenditure per head sliding back towards where it was 10 years ago, after the financial crisis and double-dip recession put pressure on incomes and induced households to thriftiness.
At the start of 2003 expenditure per head was £3,524 per year, a figure which rose to a peak of £3,892 by the end of 2007, but fell to £3,592 by the third quarter of 2012, as the crisis hit.