information

We use cookies to give you the best possible experience online. By continuing to use our website, you agree to receiving our cookies on your web browser. Visit our cookie policy page to find out more and how to change your cookie settings.

skip to main content

Catch up with the latest press releases from LV=

Brits spending on 'Lifestyle Essentials' increases to £158 billion

Press release: 19/10/2012

  • Average UK household spent £6,194 on top ten luxury 'essentials' in a year

  • Total increase of £9 billion compared to last year

  • Daily shop-bought coffee no longer deemed 'essential' for many

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' [1] 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 [2].

The Lifestyle Inflation Index found the 'essentials' (see table one below) 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).

Table one: Britain's most loved lifestyle essentials and what they're costing us

Lifestyle essentials

Percentage of people who consider it a lifestyle essential

Inflation rate (August 2012)

Total amount spent by UK households in the year to August 2012

Total amount spent by UK households in the year to August 2011

1.

Holidays / weekend breaks

44%

3.7%


£83.3 billion

£81.5 billion

2.

Meals out in restaurants

27%

3.1%

£20.2 billion

£19.4 billion

3.

TV Subscriptions

22%

3.0%

£8.1 billion

£7.8 billion

4.

Haircuts

18%

1.3%


£4.5 billion

£4.4 billion

5.

Nights out in pubs / bars

18%

2.5%

£12.1 billion

£11.6 billion

6.

Takeaways and delivery meals

17%

2.1%

£12.5 billion

£12.1 billion

7.

Culture and arts

17%

2.8%

£2.8 billion

£2.7 billion

8.

Gym / Sports memberships

15%

3.4%

£6.5 billion

£6.3 billion

9.

Trips to the cinema

15%

3.4%

£833 million

£804 million

10.

Premium foods

14%

2.1%

£7.3 billion

£7 billion

total / average

3.2%

£158 billion

£149 billion

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

Table two: 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."

Share with...

What are these?

  1. Google +1
  2. Delicious
  3. Digg
  4. reddit

Notes:

[1] The LV= Lifestyle Inflation Index was constructed by research carried out by Cebr (The Centre for Economics and Business Research) using ONS data sources to calculate how much households spent on the top ten lifestyle essentials, which totalled £158billion for the year up to and including August 2012.

Cebr used ONS data to calculate the annual inflation rate on the top ten "lifestyle essentials" year on year (for the month of August between 2000 and 2012) and compared this to CPI data for the same period. And comparing average weekly earnings (for the month of August between 2000 and 2012).

[2] Research was also conducted online from 25 – 27 September 2012 by Opinium Research on behalf of LV= (total sample size was 2,020 adults over the age of 18 years), which identified the top ten lifestyle essentials (see table one).

About LV=
LV= employs over 5500 people and serves around five million customers with a range of financial products. We are the UK's largest friendly society and a leading financial mutual.

When we started in 1843 our goal was to give financial security to more than just a privileged few and for many decades we were most commonly associated with providing a method of saving to people of modest means. Today we follow a similar purpose, helping people to protect and provide for the things they love, although on a much larger scale and through a wide range of financial services including insurance, investment and retirement products.

We offer our services direct to consumers, as well as through IFAs and brokers, and through strategic partnerships with organisations such as ASDA, Nationwide Building Society and a range of trades unions.

LVFS is authorised and regulated by the Financial Services Authority, register number 110035. LVFS is a member of the ABI, the AFM and ILAG. Registered address: County Gates, Bournemouth BH1 2NF. www.LV.com.

LV=, County Gates, Bournemouth, BH1 2NF, UK