Housing (net), fuel and power accounted for 11 per cent of household expenditure in 2001/02, on average, compared with 14 per cent in 2012.
The biggest drop in spending was seen in transport. Expenditure on transport was at its highest in 2001/02, at £87.10 when adjusted to 2012 prices, falling to £64.10 in 2012.
Transport expenditure accounted for 17 per cent of household expenditure in 2001/02, on average, compared with 13 per cent in 2012.
The results show some signs that households are limiting their spending on some discretionary items, but the picture is more complex than that. For example, spending on clothing and footwear increased slightly, against the general trend. The following sections explore this in more detail.
This chapter examines trends in household expenditure over time. Table 4.1 (101 Kb Excel sheet) and Table 4.2 (112 Kb Excel sheet) present expenditure for the years 2001/02 to 2012, adjusted to take account of inflation mainly using the Consumer Prices Index (CPI). This enables a meaningful comparison of expenditure to be made between survey years. Year-on-year comparisons must be treated with caution, because each year the LCF is reviewed and changes are made to keep it up to date. More detail on this is given in the Background section. Expenditure over the same period is also shown at “current” prices, that is, without adjusting for inflation ( Table 4.3 (101 Kb Excel sheet) ).
This section discusses some of the trends seen in average household weekly spending since 2001/02, once the effects of inflation have been taken into account.
Figure 4.1 shows total expenditure over the years from 2001/02 to 2012. The figures have been adjusted to 2012 prices, to allow for the effects of inflation. It shows how spending has declined from £526.40 in 2006 to £489.00 in 2012.
The trend observed in household spending is consistent with some of the trends seen in the economy during this period. Between 2008 quarter 1 and 2009 quarter 3, Gross Domestic Product (GDP) fell by 7.2 per cent1, making the recent recession more severe than that of the 1990s (where GDP fell by 2.5 per cent) and 1980s (where GDP fell by 5.9 per cent)2. Recovery between 2009 and 2012 was intermittent3.
A different trend emerges if spending is considered without adjusting for inflation. Without these adjustments, household spending, at the prices at the time the surveys were carried out, has increased from £398.30 in 2001/02 to £489.00 in 2012.
Figure 4.1 also shows the different trends seen for spending in two important categories, adjusted to 2012 prices:
decreasing spending on transport, and
increasing spending on housing fuel and power (excluding mortgages).
Housing fuel and power became the highest spending category in 2012, overtaking transport. Mortgage payments are not included in this category; it is made up mainly of:
net rent: £29.30 per week in 2012;
fuel and electricity: £23.20 in 2012;
repairs and maintenance: £7.00 in 2012;
water supply and miscellaneous charges: £8.40 in 2012.
Note: these figures are averaged across all households, for example, whether they pay rent or not.
Table A1 (186 Kb Excel sheet) shows household expenditure broken down by the full level of detail for 2012, under the Classification of Individual COnsumption by Purpose (COICOP) classification system. A full picture of housing related expenditure is provided in Chapter 2, including those expenses that fall outside the COICOP definition.
Households spent an average of £68.00 per week on housing (net) fuel and power in 2012, an increase from £59.20 in 2001/02 (adjusted to 2012 prices). This increase was in contrast to the general trend, with most types of spending staying relatively stable or decreasing slightly over the same period. As a proportion of total expenditure, households allocated an average of 14 per cent of expenditure to housing (net) fuel and power in 2012, compared with 11 per cent in 2001/02.
The increased spending on housing (net), fuel and power is partly attributable to rent payments. The proportion of households renting accommodation has increased over recent years, as reported by the English Housing Survey4; this finding is supported by figures published in Table A32 (77.5 Kb Excel sheet) of Family Spending for 2012 and the corresponding table for 2006, which showed the proportion of households renting increasing from 29% to 34%.
The spending figures are averaged across all households, whether they rent accommodation or not, so it makes sense that more renters leads to higher average household spending on rent, overall. It’s worth noting that Family Spending also presents the amounts spent on rents and mortgages by rent-paying and mortgage-paying households, respectively; these figures can be found in Table 2.11 (91.5 Kb Excel sheet) , the chapter on housing expenditure.
The UK has experienced real-term increases in the costs of domestic energy in recent years, as shown by figures published by the Department for Energy and Climate Change (DECC)5. This is an area where there may be limited scope for households to reduce consumption, leading to an overall increase in spending despite economic conditions of recession and limited growth. The cold winters of 2011 and 2012 also contributed to households’ essential spending on heating.
Average household expenditure on transport decreased from £87.10 per week in 2001/02 to £64.10 in 2012. As a proportion of total expenditure, households allocated an average of 13 per cent of expenditure to transport in 2012, compared with 17 per cent in 2001/02.
Several factors contributed to lower spending on transport. The price of petrol and diesel increased substantially over this period, and it is likely that motorists responded to this inflationary pressure by reducing unnecessary journeys; a reduction in journeys was recorded by the National Travel Survey in 2012 compared with earlier years6. Trends in petrol and diesel prices increased above the overall rate of inflation (documented by DECC7). A report from the RAC Foundation has explored how motorists have adapted their behaviour and choices8. The report notes the increased popularity of diesel engines, and how this has contributed to greater fuel efficiency, illustrating motorists’ efforts to limit their spending on motor fuels, a finding supported by vehicle licensing information9. Fuel efficiency of vehicles has also improved, enabling motorists to offset the impact of higher fuel prices.
As we have seen, households can limit their spending on personal transport by targeting ongoing fuel costs. Householders can often exercise choice regarding buying cars, both new and second-hand, and there has been high popularity of purchasing second-hand cars. Indeed, in 2012, average expenditure on second-hand cars and vans (£11.90 per week) was two and a half times as much as on new cars and vans (£4.70 per week).
Decreases in expenditure have been seen in categories that include some elements of discretionary spending. This means that households can save money by not buying such items in a particular year. Many items categorised under “household goods and services” can be seen as discretionary. It includes furniture, household appliances and tools. Spending decreased gradually from £35.70 in 2001/02 to £28.50 in 2012.
Another area where households can exercise a high level of discretion is spending on restaurants and hotels. Here expenditure also decreased, from £47.30 per week in 2001/02 to £40.50 in 2012. This suggests that, in less favourable economic conditions, households are prepared to limit their spending on hotel stays and restaurant visits.
Some types of spending showed a different trend. Weekly spending on clothing and footwear increased from £15.30 in 2001/02 to £23.40 in 2012 (once adjustments have been made to account for inflation). This increase has taken place despite there being an overall drop in the price of clothing10. Interestingly, spending on recreation and culture items remained relatively stable in real terms between 2001/02 and 201211.
There has been an overall reduction in weekly spending since 2001/02, but this masks a complex set of choices about how households and individuals spend their money. Looking at the trends obtained for different types of spending reveals interesting patterns. For example, there is evidence that households seek to spend less on transport, and to get value for money when buying essentials such as food. Yet more is being spent on clothing and footwear. It has been speculated that some households, that are unable to obtain mortgages, tend to spend more on non-essential items rather than provide for longer term requirements. It could be the case that this tendency is expressed in some types of spending – such as extra clothing and footwear – but not others. Certainly, our view of what constitutes essential item expenditure may also be too simplistic12. Certain items or services that may have traditionally been considered discretionary, such as recreation and culture expenditure for instance, may be considered essential by many households after they get used to having these products. Some households may have enjoyed regular holidays and gym subscriptions for many years during economic prosperity and continue with this consumption despite the less favourable economic conditions.
This was explored further in a previous edition of Family Spending, Chapter 5: “Impact of the recession on household expenditure.
This chapter presents household expenditure data over time using the Classification of Individual COnsumption by Purpose (COICOP) classification. The expenditure figures have been deflated to allow comparison of expenditure in real terms across survey years.
The figures and tables in this section present figures that have been deflated to 2012 prices using the Consumer Prices Index (CPI), using indices specific to each major COICOP category. This is with the exception of specific items to which the CPI is not applicable: for mortgage interest payment and council tax payments the Retail Prices Index (RPI) was used. The approach used to deflate figures to 2012 prices is different from previous editions, when the all-items RPI was used.
Previous editions have also reported tables based on the Family Expenditure Survey (FES) classification, used by the survey for years prior to 2001/02. Tables based on the FES classification are not presented here, but can be made available on request. The time series presented based on COICOP has been increased to encompass the full range of years on which the survey has reported on COICOP, 2001/02 to 2012.
Each year the LCF is reviewed and changes are made to keep it up to date. As such, year-on-year changes should be interpreted with caution. A detailed breakdown of the items that feed into each COICOP heading can be found in Table A1 (186 Kb Excel sheet) , while details of definition changes can be found in Appendix B.
Trends for the categories with lower levels of spending need to be treated with a degree of caution as the standard errors for these categories tend to be higher (standard errors are discussed in more detail in Appendix B). It should be noted that there may be under-reporting on certain items (notably tobacco and alcohol).
COICOP time series data in this publication are not directly comparable with UK National Accounts household expenditure data, which are published in Consumer Trends. (This publication can be downloaded from the Office for National Statistics website. National Accounts figures draw on a number of sources in addition to the LCF (please refer to Appendix B of Consumer Trends for details) and may be more appropriate for deriving long term trends on expenditure.
Table 4.1 to 4.3 can be accessed using the links on this page.
Table 4.1 (101 Kb Excel sheet) Household expenditure based on COICOP classification, 2001-02 to 2012 at 2012 prices United Kingdom
Table 4.2 (112 Kb Excel sheet) Household expenditure as a percentage of total expenditure based on COICOP classification, 2001-02 to 2012 at 2012 prices United Kingdom
Table 4.3 (101 Kb Excel sheet) Household expenditure 2001-02 to 2012 COICOP based on current prices United Kingdom
Symbols and conventions used in Family Spending 2013 edition
[ ] Figures should be used with extra caution because they are based on fewer than 20 reporting households.
.. The data is suppressed if the unweighted sample counts are less than 10 reporting households.
- No figures are available because there are no reporting households.
Rounding: Individual figures have been rounded independently. The sum of component items does not therefore necessarily add to the totals shown.
Averages: These are averages (means) for all households included in the column or row, and unless specified, are not restricted to those households reporting expenditure on a particular item or income of a particular type.
Period covered: Calendar year 2012 (1 January 2012 to 31 December 2012).
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