Household spending outpaced income growth last year 18 January 2018 Lower income families saw the fastest consumption growth 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 today (Thursday) in response to the latest ONS Family Spending figures. The ONS figures show that households increased their spending by 4 per cent in 2016-17, helped by low inflation and rising employment. Household incomes grew by 2.3 per cent over the same period, leading to lower savings and higher levels of household debt. Lower income households (in the bottom half of the income distribution) increased their spending by 7 per cent, far more than the 1 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.”
