The typical UK family spent £554.20 a week in the year to April 2017, according to the latest figures from the Office for National Statistics (ONS).
This figure is up £21.20 per week on last year and takes weekly spending back up to levels not seen since the end of 2006, before the financial crisis.
According to the ONS’ Family Spending analysis, the amount families are spending each week has risen steadily since 2012, when the figure dropped to just over £511.
Families are spending the most on transport – with an average of £79.70 a week – followed by recreation and culture at £73.50 a week. Spending on essentials including housing, fuel and power came in third at £72.60 a week.
The ONS adds that while spending levels have increased across all categories, the most significant uplifts were seen in food and non-alcoholic drinks, transport, communication, restaurants and hotels. These were followed by increased spending on clothing and footwear, household goods and services as well as recreation and culture.
The figures suggest UK families are feeling wealthier and more confident to spend.
Spending on the rise but households not saving
However, our increased spending has not been matched by increased saving, with the savings ratio falling to just 7%, the lowest level seen since 2006.
Sarah Coles, personal finance analyst at Hargreaves Lansdown says that while current savings rates do little to incentivise savings, failing to put money away could store up problems for the future, particularly if a family’s circumstances change.
She says: “During this period, high employment, 0% credit cards, and car finance deals with little or nothing to pay up front, all helped persuade people that they could afford a foreign holiday or to upgrade their motor, without breaking the bank. Meanwhile, the prospect of rock bottom savings rates did little to persuade them to put anything aside for the future.”
“However, saving is never just about the interest rate, because as anyone who lived through the financial crisis knows, your circumstances can change in ways you never imagined. We’ve seen from recent retailer results that inflation has already started to take its toll on consumers. If your financial position changes at a time when you already have significant debts or are running on empty in your savings account, you can soon find yourself in hot water.”
Hargreaves Lansdown says everyone should strive to maintain three to six months’ expenditure in savings accounts – irrespective of the rate they are earning on that money. “That way when life changes for the worse, you’ll be prepared to handle it,” adds Mrs Coles.