Survey: Inflation is up, but we still spend on luxury ‘essentials’

Inflation may be inching up at a worrying rate but protection specialist LV=’s ‘Lifestyle Inflation Index’reveals Brits have spent £149 billion, an average of £5,850 per household, in the last year on what they deem to be their ‘lifestyle essentials’ such as holidays, nights out and take away meals.

By The Newsroom
Thursday, 27th October 2011, 4:58 am

The research found the ‘lifestyle essentials’ have an overall inflation rate of 3.6 per cent in the year to August 2011, more than the increase in the nation’s pay packets (2.9 per cent) over the last 12 months.

LV= has found the inflationary rate of some ‘’lifestyle essentials’’ has raced ahead of the headline rate, with nights out in pubs and bars costing 6.6 per cent more, take away meals rising 5.6 per cent and trips to the cinema at 5.2 per cent.

Since 2000, household spending on top ten lifestyle items has increased by 46 per cent, according to the research.

Households spent the greatest sum on weekend breaks and holidays over the last year - averaging £3,200 per household.

Meals out accounted for over £19 billion of household spending and takeaways/delivery meals exceeded £12 billion.

Smart phones apps and regular app updates narrowly missed out on a top ten spot with one in seven people (14 per cent) saying it is an important part of their lifestyle.

When asked what aspects of their lifestyles they would not be willing to cut back on if they were to have a drop in income, 20 per cent said they would not want to do without holidays and 12 per cent wouldn’t trim their budget for haircuts. Dining out in restaurants and TV subscriptions take joint third place (10 per cent).

Overall, three quarters of people are making financial cutbacks in order to afford the things which they say are important to their lifestyle, and economies include buying cheaper food, using budget chains or charity shops for clothes, taking their own lunch or a flask of tea or coffee to work and growing their own fruit and vegetables

Mark Jones of LV= said: “The nation is clearly reluctant to give up what they class as ‘lifestyle essentials’. And the increasing cost of these items and services is putting people under pressure financially.

“The need to ‘get away from it all’ is important to people when economic times are hard, which explains why holidays and breaks remain the lifestyle aspect that most people are unwilling to do without.

“People’s lifestyles are, rightly so, very important to them to maintain, despite the economic conditions. And people should be encouraged to consider how they will continue to pay for the real essentials as well as some of the little luxuries should their financial circumstances change.”