Household expenditure back to pre-crisis levels

Take note – story published 6 years and 10 months ago

Latest data from the Central Statistical Bureau (CSB)  show that in 2016 average household expenditure returned to levels not seen since the financial crisis that crippled many budgets from 2008 onwards.

In 2016 household consumption expenditure comprised on average 333 euros per household member per month – 17 euros or 5.4 % more than in 2015. 

Considering that there was a 0.1 % increase in consumer prices at the same time, consumption expenditure at constant prices rose by 5.3 %.

Out of all households, the highest consumption expenditure was recorded in those located in Riga – 406 euros on average per household member monthly, which is 4.7 % or 18 euros more than in 2015. The figure matches the amount Rigans spent in 2008, just as the financial crisis hit. 

Household expenditure in urban areas grew by 5.9 % or 20 euros and reached on average 363 euros per household member monthly. In rural areas, in turn, household consumption expenditure went up by 4.0 % or 10 euros and reached on average 269 euros per household member monthly.

The increase in the consumption expenditure was encouraged by the rise in wages and salaries as well as employment, the CSB said. Compared to 2015, in 2016 net wages and salaries grew by 4.7%, and the employment rate rose by 0.8 percentage points. 

However, after years of scrimping and saving to get by, people are still not ready to repeat excesses of the pre-crisis era.

"The expenditure increase is comparatively slow, showing that households are spending their resources with caution and making some savings for future challenges. Data of the Financial and Capital Market Commission show that, compared to the year before, at the end of 2016 resident household investments in Latvian banks went up by 9.8 % or 481 million euros," said the CSB.

Households spent the greatest proportion (26 %) of their consumption expenditure on food. Expenditure on food on average per household member monthly grew from 84 euros in 2015 to 87 euros in 2016.

Compared to 2015, in 2016 the sharpest consumption expenditure rise was registered in transport costs – of 11.4 %.

But the gap between the richest and poorest members of Latvian society remains stark. 

"Richest households on food, housing, transport, clothing and footwear, as well as health generally were able to spend 379 euros per household member monthly, while poorest households – 133 euros. Compared to the poorest households, richest households spent 6 times more resources on recreation and culture," the CSB said.

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