Household spending outpaced income growth last year

By agency reporter
January 19, 2018

Household spending increased more rapidly than income growth in the last financial year (2016-17), with the biggest rises taking place among lower income households, the Resolution Foundation said in response to the latest ONS Family Spending figures.

The ONS figures show that households increased their spending by four per cent in 2016-17, helped by low inflation and rising employment. Household incomes grew by 2.3 per cent over the same period, 

Lower income households (in the bottom half of the income distribution) increased their spending by seven per cent, far more than the one per cent increase across the richest half of households.

The Foundation notes that this data covers the year from April 2016 to March 2017. More recent, but less detailed, data has shown that consumer spending has slowed as household incomes have been squeezed.

Stephen Clarke, Policy Analyst at the Resolution Foundation, said, “Today’s figures confirm that families largely shrugged off any immediate post-EU referendum jitters and went spending. This extra spending outpaced the extra level of income available to households, who turned instead to their savings and credit cards.

“More recently, rising prices and squeezed incomes have put the brakes on Britain’s big spending households.”

* Resolution Foundation http://www.resolutionfoundation.org/

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