Household expenditure surpassed pre-crisis levels in 2016

Data by Latvia's Central Statistics Office show that in 2016 household consumption expenditure comprised on average 333 euros per household member monthly – 17 euros or 5.4% more than in 2015. Considering 0.1 % increase in the consumer prices, consumption expenditure at constant prices rose by 5.3%. This returns Latvia to a higher level of household expenditure prior to the economic downturn that started in 2008.

Household consumption expenditure dynamics in 20082016
(on average per household member monthly, euros)

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.  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. Compared to 2015, in 2016 net wages and salaries grew by 4.7%, and employment rate rose by 0.8 percentage points.  However, 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 Commission1 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.

The largest share in the total consumption expenditure is still held by the costs on daily needs, i.e., expenditure on food, housing, transport, clothing and footwear, as well as health. The share thereof accounted for more than two thirds (68 %) of the total consumption expenditure. Households spent the greatest proportion (26 %) of the 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 %. The increase was mainly affected by the growth in expenditure on operation of and purchase of passenger cars. The second highest growth (of 10.3 %) was observed in expenditure on miscellaneous goods and services, especially on goods and services for personal care. The third steepest increase (9.1 %) was registered in costs on health, mainly pharmaceutical products and outpatient services.

Rise was observed also in expenditure on furnishings and household equipment (of 8.3 %), clothing and footwear (4.8 %), food and non-alcoholic beverages, communication (4.1% each), costs in restaurants and hotels (3.3 %), expenditure on alcoholic beverages and tobacco (3.1 %), housing and dwelling maintenance (2.8 %), and recreation and culture (1.5 %).

Household expenditures by category

Last year, household consumption expenditure at current prices exceeded that of 2008 (of pre-crisis period) by almost three euros per household member monthly. Household expenditure (at current prices) on housing and dwelling maintenance exceeded that of 2008 by 12 euros, expenditure on health – by six euros, and expenditure on food and non-alcoholic beverages – by three euros. The rise was influenced by the increase in the consumer prices of dwelling maintenance services (of 23 %), health (23 %), food and non-alcoholic beverages (11 %), compared to 2008.

The highest consumption expenditure was still recorded in households of employers and self-employed (394 euros) and those of wage and salary earners (347 euros), whereas consumption expenditure in pensioner households was notably lower – 267 euros per household member monthly. However, compared to 2015, in 2016 the sharpest consumption expenditure rise was recorded in households of wage and salary earners – of 5.8 %. In its turn, the smallest consumption expenditure growth was observed in households of employers and self-employed – only of 3.6 %.

Consumption expenditure by socio-economic group

Data of the Household Budget Survey show – the more children in household, the less it can afford to spend per single person. Consumption expenditure in households with three and more children on average comprised 213 euros per household member monthly, constituting only 64 % of the average national level of consumption expenditure (72 % in 2015). Households with one child spent on average 300 euros per household member monthly, while households with two children – 277 euros.  The highest consumption expenditure was recorded in households with no dependent children. In 2016, the consumption expenditure thereof on average accounted for 377 euros per household member monthly.

Richest households (belonging to the 5th quintile group2) 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 (of the 1st quintile group) – 133 euros. Compared to the poorest households, richest households spent 6 times more resources on recreation and culture.

The 2016 Household Budget Survey engaged 3,263 households all over Latvia.

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Economy
Economy

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