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Inflation eats into basic household spending

Inflation eats into basic household spending

Category: Economy

Updated: 27/03/2013
First Published: 27/03/2013

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Analysis by Halifax has revealed the full impact that rising inflation has had on the average household's monthly expenditure.

Taking in to account the rise of inflation to 2.8% last month, the bank said that if £100 was to be used as a representation of total monthly expenditure, basic needs (housing, food, water and heating) would now account for almost a quarter of this (£24.30).

If then other modern essentials such as transport, health and personal care are added to the bill, basic outgoings rise to £51.90 – more than half of a typical household's monthly spend.

To illustrate the impact rising costs have had, in 2003 basic living costs represented £48 – which means that in 10 years essential living expenses have increased 8.1%.

This has seen the amount left over for non-essential spending fall sharply, with recreation and culture suffering the most, down by the equivalent of £2.20 to £14.10 - a fall of 13.5% over the decade.

According to the analysis, transport is now the most significant monthly expense, representing £14.40 of total monthly expenditure.

"Everyone has different priorities when it comes to spending, but 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 Anthony Warrington, director of Personal Current Accounts at Halifax.

"There is no easy solution, but showing expenditure in its most basic terms like this serves to highlight the importance of budgeting in order to make sure people can pay for the things they need to buy before they look at the things they want to buy."

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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