Brits spending on ‘lifestyle essentials’ increases to £158 billion
As this week’s announcement by the Office for National Statistics shows the Consumer Price Index (CPI) has fallen from 2.5% to 2.2% in September, protection specialist LV=’s annual ‘Lifestyle Inflation Index’ reveals Brits have spent a huge £158 billion on what they consider to be their ‘lifestyle essentials’ in the last year alone despite a drop in inflation.
These top ten ‘essentials’ include holidays, meals out, TV subscriptions and that all-important haircut, but the luxury shop-bought daily coffee has fallen out of the top ten for the first time. The average annual spend on ‘lifestyle essentials’ is £6,194 per household (£5,850 in 2011), with the UK as a whole spending £9 billion more than last year on these items, despite almost one in five (19%) people suffering a pay freeze during the same period.
The Lifestyle Inflation Index found the ‘essentials’ have an overall inflation rate of 3.2% to August 2012, significantly more than the increase in the nation’s pay packets over the same period (1.5%). However there is some light at the end of the tunnel as the inflationary rate of some ‘lifestyle essentials’ slowed in the last year, with nights out at 2.5% from 6.6% in 2011, and takeaway meals increasing by 2.1% compared to 5.6%.
Households are still firmly in need of their routine escape as holidays and weekend breaks remained the lifestyle element deemed most essential, with households spending £3,250 each on average, over £83 billion collectively. Restaurant dining accounted for just over £20 billion of household spending in 2012 (19.4 billion in 2011) and takeaways/delivery meals exceeded £12 billion (£7.8 billion in 2011).
Cutting back to save the pounds
In order to afford the more ‘luxury’ items people deem essential to their lifestyle, over three quarters (78%) say they are making cutbacks in areas of household spending. The most common cutback is buying cheaper or own brand basic food (48%). The ‘economising’ theme continues, with one third (34%) stating they have switched to buying clothes and other personal items at cheaper shops than they may have in the past, and one in five (20%) say they are buying clothes and other personal items second hand.
Mark Jones, LV= Head of Protection, said: The need to get away from it all is important to people when economic times are hard, which explains why holidays and weekend breaks remain the lifestyle aspect that most people are most unwilling to do without. It is no surprise that people are trying to ‘keep calm and carry on’, and making cutbacks in other areas to maintain the little luxuries in their life.”
Other cut-backs Brits are making in order to lead a life of luxury
A third (32%) save money by regularly taking their lunch to work instead of buying it
One in ten (11%) take their own tea or coffee into work
One in six (16%) grow their own fruit and vegetables in order to save money
Top five lifestyle essentials Brits would be unwilling to cut back if income was cut or squeezed
Lifestyle essentials - Percentage of those not willing to cut back on spending
Holidays / weekend breaks 23%
TV subscriptions 17%
Haircuts / styling by a professional 16%
Meals out in restaurants 16%
Nights out in the pub / bars 15%
Mark Jones continued: “It is clear that these lifestyle luxuries are central to many people’s happiness. However, people need to consider how they would continue to pay for the real essentials should their financial circumstances change. Over eight in ten (83%) working adults said they do not have any protection in place to cover their income should they be unable to work due to accident or illness, leaving many at risk of not only missing out on their ‘essential luxuries’, but being unable to cover the real day to day essentials, such as their mortgage, food and energy bills. People should seek professional advice about the best way of financially protecting themselves and their family”
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