Nominal increase in household expenditure costs

Latest analysis of ONS data has found that the average weekly household expenditure was £567.70 in the financial year ending (FYE) 2023, a nominal increase of £38.90 from the previous year (7%); however, after accounting for inflation this was a real-terms decrease of £21.10 (4%).

The greatest real-terms reduction in expenditure was in food and non-alcoholic drinks, suggesting that households are either consuming less, or where applicable, switching to lower cost or quality alternatives.

The richest fifth of households’ weekly expenditure was more than twice that of the poorest fifth of households in FYE 2023, at £857.30 and £356.90, respectively.

The proportions of total expenditure spent on food and non-alcoholic drinks, transport, and recreation and culture have returned to FYE 2020 pre-coronavirus (Covid-19) pandemic levels, while restaurants and hotels remain below FYE 2020 levels.

Commenting on ONSdata Alistair McQueen, Head of Savings & Retirement at Aviva said “Today’s report shows that households managed their budgets in response to the financial pressures they have faced. Average weekly household expenditure on goods and services was reported to be £567.70 – a real-terms cut-back of 4%. Eating and heating were sources of particular price pressures at this time, and households responded by reducing their expenditure in real terms on these items by 11% and 20%, respectively. ‘Belt-tightening appears to have been widespread.

“Today’s data comes three weeks after the latest pension statistics were published by the Department for Work & Pensions2. Despite the pressures on household finances, these figures reported no significant cut back in retirement savings. There was no notable reduction in pension participation, between different genders, ages or incomes (See table below). Fewer than 1% of savers made the active choice to stop saving in their workplace pension. With record numbers now saving for their retirement, this resilience is to be welcomed.

“The years 2022 and 2023 represented a big financial test. And recent reports suggest that households did what they could to balance their books. They managed their weekly budgets with care while wisely keeping an eye on their futures.

“Inflation has since fallen and wages are, on average, rising. But financial management remains a hot topic for many. Today’s data should give us confidence in our ability to navigate these pressures.”