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Tuesday 22.08.2017 | Name days: Rudīte, Everts

Household expenditure on consumption exceeds pre-crisis levels in Latvia

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUIn 2016, household consumption expenditure comprised on average EUR 333 per household member monthly – EUR 17 or 5.4 % more than in 2015.

Considering 0.1 % increase in the consumer prices, consumption expenditure at constant prices rose by 5.3 %, according to data from the Central Statistical Bureau of Latvia.

Out of all households, the highest consumption expenditure was recorded in those located in Riga – EUR 406 on average per household member monthly, which is 4.7 % or EUR 18 more than in 2015.  Household expenditure in urban areas grew by 5.9 % or EUR 20 and reached on average EUR 363 per household member monthly. In rural areas, in turn, household consumption expenditure went up by 4.0 % or EUR 10 and reached on average EUR 269 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 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 EUR 481 million.

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 EUR 84 in 2015 to EUR 87 in 2016.

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

Last year, household consumption expenditure at current prices exceeded that of 2008 (of pre-crisis period) by almost EUR 3 per household member monthly. Household expenditure (at current prices) on housing and dwelling maintenance exceeded that of 2008 by EUR 12, expenditure on health – by EUR 6, and expenditure on food and non-alcoholic beverages – by EUR 3. 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 (EUR 394) and those of wage and salary earners (EUR 347), whereas consumption expenditure in pensioner households was notably lower – EUR 267 per household member monthly. However, compared to 2015, the sharpest consumption expenditure rise was recorded in households of wage and salary earners (5.8 %) in 2016. In its turn, the smallest consumption expenditure growth was observed in households of employers and self-employed – only of 3.6 %.

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 EUR 213 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 EUR 300 per household member monthly, while households with two children – EUR 277.  The highest consumption expenditure was recorded in households with no dependent children. In 2016, the consumption expenditure thereof on average accounted for EUR 377 per household member monthly.

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


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