From 7 May 2024, The North East Evidence Hub is a project of the North East Combined Authority. Find out more at northeast-ca.gov.uk/north-east-lep
Our Economy 2022 : Cost of living and household spending
How are North East households being affected by recent increases in the costs of living? What changes in regional patterns of expenditure is this likely to lead to?
Households across the UK have been affected by higher costs of living in 2022 than in previous years. In the North East, on average, household expenditure is more concentrated on items that currently have high inflation rates. Hence, it is likely that the impact of the increased cost of living is greater for many in the region than elsewhere.
Key data sets used in this section include those from the annual Office for National Statistics (ONS) "Family Spending" publication, which is based on responses to the Living Costs and Food Survey. The latest regional data from this source is for the year ending March 2021. More up to date statistics in this section come from the monthly UK inflation rate publication, which gives national data only but provides rates for many goods and services.
An ONS publication based on responses to the regular Opinions and Lifestyle Survey provides information broken down into characteristics of different households including the region of residence. This gives a timely snapshot of experiences and responses to changes in the cost of living. Foodbank statistics from the Trussell Trust also provide up to date trends data for this section.
Essentials are a large share of North East household spend
In 2020/21, food and non-alcoholic drinks made up 12.6% of North East household spend (UK 11.7%) .
Relatively high transport expenditure in the region
North East households spent 4.0% of average weekly expenditure in 2020/21 on petrol and diesel (UK 3.4%).
Very high food and fuel inflation rates in the latest data
Annual UK rates of 15% for food; 23% for petrol; and 32% for diesel.
Households in the region plan to cut food and travel spend
About 45% of adults plan to spend less on food and essentials, 48% to cut non-essential journeys.
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Overall spending
The latest available regional household expenditure dataset is for the financial year ending in March 2021. In that period, the average weekly total expenditure of North East households was only about 83% of the average across the UK.
Because of the lower total expenditure, North East households are more likely to spend a higher percentage of their total on essential items. In 2020/21 they spent, on average, 12.6% of the total on food and non-alcoholic drinks and 14.4% on transport, compared to 11.7% and 13.7%, respectively, nationally. About 13.7% was spent on housing and utilities, but, because of higher housing costs elsewhere, this was smaller than the national percentage (14.9%).
The current (September 2022) UK annual inflation rate is highest for food and non-alcoholic drinks (14.6%) and transport (10.9%), among the 12 broad categories of goods and services. As these make up a larger percentage of North East expenditure than nationally, these inflation levels have a greater impact on the region's households than they do elsewhere.
In the latest ONS public opinions and social trends survey, about 88% of North East adults reported that they had experience a cost of living increase, a similar percentage to nationally. About 92% of these people have identified a rise in food prices in the North East, with 80% citing increased gas and electricity prices and 74% experiencing increased transport fuel prices.
In response, almost three-fifths of North East adults experiencing a higher cost of living plan to spend less on non-essentials, with about 45% spending less on food and essentials. About 19% plan to use savings in response, with 17% planning to use credit more than usual. Both of these percentages are higher than the national equivalents.
Household spend (weekly £), by broad product, North East region, UK
Source: ONS – Family spending workbook by region 2020/21 [released 18 Jul 2022, next update summer 2023] Data information: Statistics taken from data collected on the Living Costs and Food Survey (LCF). This is a voluntary sample survey of private households designed to provide information on expenditure patterns and food consumption. The data covers the financial year 2020/21 (April 2020 to March 2021) and, therefore, covers a period when Covid-19 was impacting on the UK economy. Housing spend includes rental costs less benefits etc. received.
Source: ONS – Family spending workbook by region 2020/21 [released 18 Jul 2022, next update summer 2023] Data information: Statistics taken from data collected on the Living Costs and Food Survey (LCF). This is a voluntary sample survey of private households designed to provide information on expenditure patterns and food consumption. The data covers the financial year 2020/21 (April 2020 to March 2021) and, therefore, covers a period when Covid-19 was impacting on the UK economy.
Source: ONS Consumer price inflation, UK [latest update: 19 Oct 2022, next update 16 Nov 2022] Data information: Consumer Prices Index including owner occupiers’ housing costs (CPIH) is the most comprehensive measure of inflation. It extends the Consumer Prices Index (CPI) to include a measure of the costs associated with owning, maintaining and living in one’s own home. However, the CPI is the inflation measure used in the government’s target for inflation.
The 12-month or annual inflation rate is the most common approach to measuring inflation. It compares prices for the latest month with the same month a year ago.
Source: ONS Consumer price inflation, UK [latest update: 19 Oct 2022, next update 16 Nov 2022] Data information: Consumer Prices Index including owner occupiers’ housing costs (CPIH) is the most comprehensive measure of inflation. It extends the Consumer Prices Index (CPI) to include a measure of the costs associated with owning, maintaining and living in one’s own home. However, the CPI is the inflation measure used in the government’s target for inflation.
The 12-month or annual inflation rate is the most common approach to measuring inflation. It compares prices for the latest month with the same month a year ago.
This chart shows a time series of the overall CPIH rate and for three of the 12 broad groups of products.
Source: ONS Impact of increased cost of living on adults across Great Britain [latest update: 25 Oct 2022, next update tbc] Data information: Based on responses to Opinions and Lifestyle Survey (OPN) in the period 22 June to 11 September 2022.
Source: ONS Impact of increased cost of living on adults across Great Britain [latest update: 25 Oct 2022, next update tbc] Data information: Based on responses to Opinions and Lifestyle Survey (OPN) in the period 22 June to 11 September 2022.
Percentage shown is % of the adults who stated that they had an increased cost of living.
Source: ONS Impact of increased cost of living on adults across Great Britain [latest update: 25 Oct 2022, next update tbc] Data information: Based on responses to Opinions and Lifestyle Survey (OPN) in the period 22 June to 11 September 2022.
Percentage shown is % of the adults who stated that they had an increased cost of living.
The latest data has annual inflation rates of more than 25% for many individual food products, including milk, butter, margarines, flours and cereals, supplies of which have been affected by the Russian invasion of Ukraine.
Together these goods represented about 2.5% of average North East household expenditure in 2020/21, so recent large price increases have had an impact on family budgets in the region. In response, about 45% of the North East adults currently experiencing a cost of living increase intend to spend less on food and other essentials. This is the joint third highest percentage among English regions.
The number of Trussell Trust food parcels issued in the North East in May to September 2022 was higher than in the same period of the prevous peak year of 2020, when families were affected by Covid-19. The latest total was 55% higher than in May to September 2021, the largest annual percentage increase among the nine English regions. The increase in North East food parcels to children had an even sharper increase (up 61%).
Household spend (weekly %) on food, by product, North East region, UK
Source: ONS – Family spending workbook by region 2020/21 [released 18 Jul 2022, next update summer 2023] Data information: Statistics taken from data collected on the Living Costs and Food Survey (LCF). This is a voluntary sample survey of private households designed to provide information on expenditure patterns and food consumption. The data covers the financial year 2020/21 (April 2020 to March 2021) and, therefore, covers a period when Covid-19 was impacting on the UK economy.
Source: ONS Consumer price inflation, UK [latest update: 19 Oct 2022, next update 16 Nov 2022] Data information: This chart shows food products where the September 2022 annual inflation rate was greater than 15%
Consumer Prices Index including owner occupiers’ housing costs (CPIH) is the most comprehensive measure of inflation. It extends the Consumer Prices Index (CPI) to include a measure of the costs associated with owning, maintaining and living in one’s own home. However, the CPI is the inflation measure used in the government’s target for inflation.
The 12-month or annual inflation rate is the most common approach to measuring inflation. It compares prices for the latest month with the same month a year ago.
Source: ONS Impact of increased cost of living on adults across Great Britain [latest update: 25 Oct 2022, next update tbc] Data information: Based on responses to Opinions and Lifestyle Survey (OPN) in the period 22 June to 11 September 2022.
Percentage shown is % of the adults who stated that they had an increased cost of living.
Source: Trussell Trust mid year statistics [latest update: October 2022, next update: April 2023] Data information: Counts of the number of emergency food parcels distributed by the Trussell Trust between 1 April and 30 September. The statistics are a measure of volume rather than unique users and are collected using an online system into which food banks enter data from each food bank voucher.
Figures from the Trussell Trust cannot be used to fully explain the scale of food bank use across the UK, because they relate to food banks in just one network, do not include other food aid providers. There are more than 1,300 food bank centres in the Trussell Trust’s UK-wide network. This is likely to be less than half the total number of foodbanks in the UK but the statistics provide useful information about trends.
Source: Trussell Trust mid year statistics [latest update: October 2022, next update: April 2023] Data information: Counts of the number of emergency food parcels distributed by the Trussell Trust between 1 April and 30 September. The statistics are a measure of volume rather than unique users and are collected using an online system into which food banks enter data from each food bank voucher. Figures from the Trussell Trust cannot be used to fully explain the scale of food bank use across the UK, because they relate to food banks in just one network, do not include other food aid providers. There are more than 1,300 food bank centres in the Trussell Trust’s UK-wide network. This is likely to be less than half the total number of foodbanks in the UK but the statistics provide useful information about trends.
Almost 5.8% of average North East weekly household spend in 2020/21 was on net rent. This was a smaller percentage than nationally (almost 7.2%) but an additional 6.8% of North East spend was on water supply, electricity, gas and other fuels for the household, a higher percentage than nationally (6.2%).
The latest (September 2022) annual inflation rates for domestic gas and electricity were 96% and 54%, respectively, so given the higher percentage of spend on these products, the high rates have a particularly strong impact for many North East households.
In a recent survey, about 9% of North East adults reported that they were behind with their gas or electricity bill payments, the joint highest regional percentage. On the other hand, only about 1% stated that they were behind on mortgage or rent payments, the joint lowest regional percentage.
In the same survey, almost half of North East adults reported some difficulties with paying gas or electricity bills, with over 30% reporting difficulties with mortgage or rent payments. Both percentages were slightly higher than the national equivalents. Over half of North East adults affected by the increased cost of living intend to use less fuel in their home than previously.
Household spend (weekly %) on housing, fuel and power, by product, North East region, UK
Source: ONS – Family spending workbook by region 2020/21 [released 18 Jul 2022, next update summer 2023] Data information: Statistics taken from data collected on the Living Costs and Food Survey (LCF). This is a voluntary sample survey of private households designed to provide information on expenditure patterns and food consumption. The data covers the financial year 2020/21 (April 2020 to March 2021) and, therefore, covers a period when Covid-19 was impacting on the UK economy.
Source: ONS Consumer price inflation, UK [latest update: 19 Oct 2022, next update 16 Nov 2022] Data information: Consumer Prices Index including owner occupiers’ housing costs (CPIH) is the most comprehensive measure of inflation. It extends the Consumer Prices Index (CPI) to include a measure of the costs associated with owning, maintaining and living in one’s own home. However, the CPI is the inflation measure used in the government’s target for inflation.
The 12-month or annual inflation rate is the most common approach to measuring inflation. It compares prices for the latest month with the same month a year ago.
Source: ONS Impact of increased cost of living on adults across Great Britain [latest update: 25 Oct 2022, next update tbc] Data information: Based on responses to Opinions and Lifestyle Survey (OPN) in the period 22 June to 11 September 2022.
Percentage shown is % of adults who pay these bills
Source: ONS Impact of increased cost of living on adults across Great Britain [latest update: 25 Oct 2022, next update tbc] Data information: Based on responses to Opinions and Lifestyle Survey (OPN) in the period 22 June to 11 September 2022.
Percentage shown is % of adults who pay these bills. Difficult is defined as "very or somewhat difficult".
Source: ONS Impact of increased cost of living on adults across Great Britain [latest update: 25 Oct 2022, next update tbc] Data information: Based on responses to Opinions and Lifestyle Survey (OPN) in the period 22 June to 11 September 2022.
Percentage shown is % of the adults who stated that they had an increased cost of living.
About 4.0% of average North East household expenditure in the latest data (2020/21) was on petrol, diesel and other motor oils. In addition, the cost of new or second-hand vehicles, when averaged over a week, represented 5.8% of expenditure. These percentages were higher than the UK equivalents (3.4% and 5.1%, respectively).
The higher share of expenditure in the North East means that the high inflation rates for petrol (23%) and diesel (32%) have a particularly large impact in the region. This is reflected in the plans of 48% of adults experiencing cost of living rises to cut back on non-essential journeys in their private vehicle. The inflation rates for fuel mean that, when interviewed between June and September, about 13% of North East adults reported that they had noticed a recent increase in public transport costs. This was the highest percentage outside of London.
Household spend (weekly %) on transport, by product, North East region, UK
Source: ONS – Family spending workbook by region 2020/21 [released 18 Jul 2022, next update summer 2023] Data information: Statistics taken from data collected on the Living Costs and Food Survey (LCF). This is a voluntary sample survey of private households designed to provide information on expenditure patterns and food consumption. The data covers the financial year 2020/21 (April 2020 to March 2021) and, therefore, covers a period when Covid-19 was impacting on the UK economy.
Source: ONS Consumer price inflation, UK [latest update: 19 Oct 2022, next update 16 Nov 2022] Data information: Consumer Prices Index including owner occupiers’ housing costs (CPIH) is the most comprehensive measure of inflation. It extends the Consumer Prices Index (CPI) to include a measure of the costs associated with owning, maintaining and living in one’s own home. However, the CPI is the inflation measure used in the government’s target for inflation.
The 12-month or annual inflation rate is the most common approach to measuring inflation. It compares prices for the latest month with the same month a year ago.
Source: ONS Impact of increased cost of living on adults across Great Britain [latest update: 25 Oct 2022, next update tbc] Data information: Based on responses to Opinions and Lifestyle Survey (OPN) in the period 22 June to 11 September 2022.
Percentage shown is % of the adults who stated that they had an increased cost of living.
Source: ONS Impact of increased cost of living on adults across Great Britain [latest update: 25 Oct 2022, next update tbc] Data information: Based on responses to Opinions and Lifestyle Survey (OPN) in the period 22 June to 11 September 2022.
Percentage shown is % of the adults who stated that they had an increased cost of living. Journeys are those in own vehicle.
