Five key takeaways on UK household spending

a post by L:aura Gardiner for the Resolution Foundation blog

Yesterday [24 January] the Office for National Statistics (ONS) published its annual rundown of what UK households spend their money on. Quite a bit of the ONS’s analysis focused on who spends most on takeaways. But given household consumption is perhaps the most detailed and direct window on current living standards, there’s plenty more of interest in this treasure trove of information. Here are our five key takeaways (of the non-edible kind).

Household spending appeared to rise gently in the year to 2017-18
Average weekly household spending was £573 during 2017-18, a gentle 0.7 per cent increase on the previous year (after adjusting for inflation). As the blue line in the chart below shows, this means we’ve had five years of almost-continuous growth in real spending – a trend mirrored in household income data, and consumption aggregates from the National Accounts.

Growth in spending was skewed towards higher-income households last year
It will come as no surprise that richer households spend more than poorer ones. The chart below shows that in 2017-18 those in the top 10 per cent of incomes spent over four times more than the bottom 10 per cent. Although large, this gap is smaller than the income differences between the top and bottom – further proof that the rich save more of the money they have coming in.

Essentials comprise nearly half of spending for the lowest-income households, compared to less than a third for those on the highest incomes
Beyond the overall value of spending, what are households spending money on? The chart below splits average spending in each income decile into different categories, with darker bars showing those categories commonly classed as ‘essentials’ (housing, fuel, food and clothing). 49 per cent of spending in the bottom income decile was devoted to essentials in 2017-18, compared to 29 per cent in the top decile.

Households headed by younger retirees spend most per-person overall, but those in their 20s spend most on essentials
Household spending varies across the life cycle and peaks when adults are in their 30s and 40s, in a large part because these households tend to be larger due to bringing up children. To correct for this, the chart below presents spending on a per-person basis, showing that on this measure it is households headed by those aged 50-75 that spend most overall.

Household spending patterns provide a window on wider social, cultural and economic shifts
The rich detail provided by spending data means it can be illuminating to wider debates about how life and work in Britain are changing. Perhaps wishing to keep up with the current focus on Deliveroo-type jobs, the ONS’s publication shines a light on the £5.10 per week UK households spend on takeaways, which make up a greater share of ‘catering services’ spending for the young and those on lower incomes. It also shows that we spend less on alcohol than we did a decade ago and do more of our drinking at home. This chimes with the ONS’s earlier work on the decline of small pubs, as consumers increasingly favour larger ones that focus on gastro menus rather than actual booze.

Details under each of these headings can be found here together with graphs and charts

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