UK household spending hit its highest level since before the financial crisis last year

Households spent an average of £79.70 a week on transport alone between April 2016 and March 2017

Average weekly household spending in London and the South East was over £600 (Getty/iStock)

The average UK household spent £554.20 per week in the year to the end of last March, the highest level since before the financial crisis after adjusting for inflation, official data has shown.

According to the Office for National Statistics, the figure marks a rise of £21.20 in real terms when compared with the previous year.

Households spent an average of £79.70 a week on transport between April 2016 and March 2017 – an increase of £5.40 in real terms on 2016 – which makes transport the top spending category.

Households in the 65 to 74-year-old age group allocated close to a fifth of their total spending to recreation and culture during that period, while households without children spent a higher proportion on transport than households with children.

The ONS pointed out that inflation rose from 0.7 per cent in April 2016 to 2.3 per cent in March 2017, which at the time represented the highest level of inflation since September 2013. It said that rising levels of inflation tend to encourage households to bring forward certain purchases, especially of big-ticket items. This, it said, could be one of the drivers of higher levels of spending during the year.

Beyond transport, expenditure on food, non-alcoholic drinks, communication, restaurants and hotels saw particularly stark increases during the year, while spending on clothing and footwear, household goods, services, recreation and culture also witnessed a boost.

The ONS said that transport spending was likely driven by people buying cars, an increase in the cost of running vehicles, and a rise in the price of transport services – like air fares.

For the first time ever, recreation and culture was the second highest spending category overall. Households spent an average of £73.50 a week on goods and services that fell into this category, which was £5 more than they spent in the previous year. The ONS said that one of the biggest reasons for that rise was an increase in spending on package holidays abroad.

England had the highest level of household spending for a third consecutive year. At £547.40 a week it was more than £10 higher than the UK average. But there were significant variations across the regions.

Average weekly household spending in London and the South East was over £600. In the North East it was approximately £200 less at £437.

Katherine Chapman, director of the Living Wage Foundation, said that the data underscores that the poorest households continue to be hit hard by rising living costs – particularly as wage rises stagnate.

“Families are having to devote more and more of their finances to necessary costs like transport and household bills. The result is that millions of people are struggling to make ends meet, with some workers resorting to visit foodbanks or even skip meals,” she said.

Ms Chapman said that in this environment, the onus is on individual businesses to tackle poverty amid a squeeze in the cost of living.

“If we want to stop family finances being swallowed up by basic necessities, and see wages that genuinely cover the cost of living, we need to see more companies step up and pay a real living wage.”

The National Living Wage is set to increase from £7.50 to £7.83 for workers aged 25 and over from April.