Consumers are better off than in 2000, says CSO

Consumers are better off now than they were at the start of the decade, with the average household spending €788 every week out…

Consumers are better off now than they were at the start of the decade, with the average household spending €788 every week out of an average disposable income of €842, according to a new household budget survey by the Central Statistics Office. Laura Slatteryreports.

Household spending in 2004-2005 was 36 per cent higher than it was in 1999-2000, when the CSO last conducted this kind of survey.

But disposable income increased by an even higher percentage over the period, jumping 53 per cent.

The gap between the highest and lowest income households has widened, although this is largely because the lowest income households had fewer people in them than before, while higher income households became more likely to have more than one earner.

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The top 10 per cent of households by gross income were found to have a disposable income that was 14 times that of households within the lowest 10 per cent income bracket. Five years before, the ratio was found to be 13 to 1.

Households within the highest income group spent more than twice the national average every week, a sum of €1,659, while those in the lowest income group spent just €219, less than a third of the national average.

The lowest income households saw their disposable incomes increase by 48 per cent compared to a rise of 56 per cent for the richest 10 per cent.

A 55 per cent increase in State benefits over the five years was the main reason for the increase in disposable incomes among the poorest households. The average State payments rose from €81 to €126 a week over the period.

But the highest income group also did well out of rising State benefits. As the group most likely to have children, these households saw their incomes boosted by proportionately higher child benefit payments. A fifth of pensioners are now within the lowest 10 per cent group by income, with less than 1 per cent of pensioners in the richest 10 per cent of households.

With direct taxes eating up an average of 20 per cent of income, compared to 17 per cent in 1999-2000 and gross weekly earnings rising 48 per cent to €990, average disposable incomes were able to exceed average expenditure.

This marks a reversal on the 1999-2000 survey, when households spent an average of €578 each week despite only having disposable income of €552.

But disposable cash only exceeded weekly spending in the top 30 per cent of households by income. Other groups were still spending more than their disposable incomes, which the CSO's James Dalton said pointed to people using loans, credit cards or their savings to make purchases.

The CSO asked almost 7,000 households to keep a diary of their spending for a two-week period between October 2004 and December 2005, keeping their till receipts.

The survey is used to update the proportion of income spent on different categories of goods and services in the consumer price index, which is used to measure inflation.

Consumers were found to spend almost 70 per cent more on housing, 55 per cent more on services and 46 per cent more on holidays than they did in the previous survey, but the proportion of income spent on food and transport fell.

Meanwhile new figures from the Central Bank show that growth in the net financial assets of Irish households has failed to match the overall growth levels in the economy.