The volume measure provides an estimate of the amount of goods and services purchased by households. In Q1 2013 it increased by 0.3%, meaning it was 3.3% below the peak of spending (in volume terms) in Q4 2007. The current price value of household spending (inflation included) shows how much UK households spent. In Q1 2013 it increased by 1.0% on the quarter, meaning it was 13.6% higher than Q4 2007, the fifteenth consecutive quarter of growth.
Household Final Consumption Expenditure (HHFCE) includes spending on goods and services except for: buying or extending a house, investment in valuables (paintings, antiques) or purchasing second-hand goods. Explanations for these exceptions and the related concepts are available in the Consumer Trends guidance and methodology section.
Household expenditure is used in the National Accounts to measure the contribution of households to economic growth and accounts for about 60% of the expenditure measure of GDP. There are two measures:
Current prices - which is the value of spending in a particular quarter measured in the prices at that time;
Volume terms - which adjusts for price inflation and gives a better picture of whether households are purchasing more goods and services
Analysis in this section of the Statistical Release is conducted from 1997 because this is the period from which revisions were applied in Blue Book 2013.
From 1997, household final consumption expenditure:
Increased in current prices to £224.3 billion in Q1 2008, before falling to £216.0 billion in Q2 2009, then returning to predominantly positive growth to reach £254.0 billion in the present quarter.
Increased to £242.1 billion in volume terms in Q4 2007, before falling to £226.4 billion in Q2 2009. It has now increased to £234.1 billion, the highest volume spending since Q3 2008.
The pre-2007 increases in household spending are a consequence of households facing higher prices and buying more goods and services. However, in 2008 and 2009 households spent less because they bought less. Since 2009, household spending has increased, in current price terms, but the volume of goods and services purchased has experienced far lower growth, indicating that increases in prices have been greater than increases in volume.
In Q1 2013, the value of household spending in current prices increased by 1.0% on the previous quarter, and by 4.1% on the same quarter in 2012. The volume measure of household spending increased by 0.3% on the quarter and 1.5% on the same quarter in 2012, signifying households are spending more for a lower volume of goods and services than in the past.
In Q1 2013 the value of current price spending per head was £3,993, an increase of £31 on the previous quarter continuing the trend of positive growth. The increase in the volume measure of spending by households in Q1 2013 indicates that households spent more because they bought more in addition to the effect of positive price increases.
In Q1 1997 the value of household spending per head in current prices was £2,177. It reached £3,659 in Q1 2008 before falling to £3,496 in Q2 2009. These changes in current price spending by households were primarily influenced by the increase and then fall in the volume of goods and services bought. Since that date the current price expenditure per head has continued to increase to reach the Q1 2013 level of £3,993, an increase of 9.1% when compared to Q1 2008. The changes in spending per head after 2009 were mostly caused by price increases, but the increase in the volume measure of spending in the last six quarters shows that households have recently increased the underlying amount of goods and services they are purchasing.
The largest component of ‘Housing’ expenditure is the estimate for ‘Imputed rentals for housing’. This is primarily owner-occupied rentals (a measure of what an owner would pay to rent their home). In the latest quarter, ‘Imputed rentals for housing’ increased by £8 to £642, indicating continuing strength in the housing rental market. In volume terms, expenditure has increased by 0.2% when compared with Q4 2012, and 2.7% when compared with Q4 2007.
Spending on ‘Transport’ was virtually flat when compared with Q4 2012 at £563. The main components within ‘Transport’ also remain unchanged, with ‘Operation of Vehicles‘ the largest component with current price spending per head of £230 in Q1 2013, a fall of £6 on the previous quarter.
Spending per head on ‘Motor vehicles’ was £177 in Q1 2013, the increase on the previous quarter continuing the upward trend of the last four quarters. The upward trend is a consequence of more vehicles being purchased (shown by the increasing volume measure in the latest quarter) rather than price increases in the car market. Both the value of spending by households on cars and the volume of vehicles purchased reached levels not seen since Q4 2009, when the Government Car Scrappage Scheme was influencing the car market.
In volume terms (adjusted for inflation), spending on ‘Housing’ made the largest contribution to the positive growth in Q1 2013, increasing by 0.8% on the quarter. Within ‘Housing’, the purchase of ‘Gas’ made the largest contribution to growth this quarter increasing by 7.2% on the quarter. To emphasise the strength in the Q1 2013 estimate households purchased 22.4% more gas than for the same quarter in 2012. This was reflected in the current price spending also rising by 30.6%. This was likely due to Q1 2013 containing the coldest March since 1962.
When compared with Q4 2007 (in volume terms the peak of total household spending), expenditure on ‘Housing’ in volume terms has increased by 4.9% while current price spending has increased by 45.2%.
The largest negative contribution to growth this quarter can be seen in ‘Food and non-alcoholic beverages’ which has fallen by 1.3% in volume terms.
During Q1 2013, spending on durable goods, such as motor cars and household appliances, has continued to gain strength. In particular, spending on ‘Motor cars’ has increased by 3.1% in volume terms (4.4% in current prices) and has now exceeded levels of Q4 2007 in both measures (Q4 2007 being the highest level of household spending in volume terms). Overall, durable goods has increased by 2.1% in volume terms, the seventh consecutive quarter of positive growth.
The household expenditure measure of prices is an important component of the GDP deflator which is used to determine price pressures in the economy.
This quarter the seasonally adjusted household expenditure measure of prices (the deflator) increased by 0.6%. The household expenditure deflator (seasonally adjusted) is now 2.6% higher than in Q1 2012. This continues the trend of positive deflator growth since 2009 Q2, indicating the increased prices that households face when purchasing goods or services.
In Q1 2013, the largest increases in percentage terms in the household deflator was seen in ‘Housing’, which grew by 1.8%. ‘Electricity Gas and Other Fuels’ has been the main contributor, increasing by 4.3%.
It should be noted that the CPI and RPI are the two official main measures of inflation. From Blue Book 2011, CPI has been used to deflate estimates of Household Expenditure.
In common with all components of UK Gross Domestic Product (GDP), household final consumption expenditure (HHFCE) estimates are subject to the revisions policy of the UK National Accounts. This allows revisions to estimates to be made at particular times of the year.
In Q1 2013, the revisions to total household final consumption expenditure have been made in line with the revisions policy for Blue Book 2013. Content of UK National Accounts: the Blue Book 2013 (62.7 Kb Pdf) provides an explanation of the methods changes introduced in Blue Book 2013.
Revisions to household final consumption expenditure estimates are summarised in Table 1. They reflect updated data from suppliers, as well as adjustments to HHFCE as a result of Supply and Use balancing and the GDP balancing process. The article Blue Book 13: Improvements to Household Expenditure Estimates provides more information on what Supply and Use balancing is, and how it affected HHFCE estimates in Blue Book 2013.
|Revisions to value (current prices)||Revisions to growth (current prices)||Revisions to growth (volume measure)|
All growth rates in Consumer Trends are rounded to one decimal place. This may cause disparity between revisions displayed in the main Consumer Trends tables and the revisions table above.
Consumer Trends guidance offers full details regarding this publication.
Date of this publication : 27 June 2013
The next edition of Consumer Trends, Q2 2013, will be published on 26 September 2013. Estimates will be consistent with Blue Book 2013.
Household Final Consumption Expenditure estimates produced in Consumer Trends are produced according to the National Accounts timetable. The preliminary estimate of GDP for the second quarter of 2013 will be published on 25 July 2013, followed by the second estimate of GDP on 23 August 2013. The next full set of Quarterly National Accounts will be published on 26 September 2013.
The article 'Blue Book 2013: Improvements to Household Expenditure Estimates' has been published as part of this release.
Basic Quality Information for Consumer Trends Statistical Bulletin
Summary Quality reports
A Summary Quality Report (134.3 Kb Pdf) for this Statistical Bulletin can be found on the National Statistics website.
Key quality issues
Household expenditure volume series are chainlinked annually. Estimates in this Consumer Trends are now based on 2010 price structures, i.e the chained volume measure estimate in 2010 equals the current price value of expenditure in 2010.
Growth in each year up to and including 2010 is calculated at average prices of the previous year. Growth from 2010 onwards is calculated at average prices of 2010. Volume series are only additive for the most recent periods; annual data for 2010 onwards and quarterly data for quarter one 2011 onwards.
Common pitfalls in interpreting series: Very few statistical revisions arise as a result of ‘errors’ in the popular sense of the word. All estimates, by definition, are subject to statistical ‘error’ but in this context the word refers to the uncertainty inherent in any process or calculation that uses sampling, estimation or modelling. Most revisions reflect either the adoption of new statistical techniques or the incorporation of new information which allows the statistical error of previous estimates to be reduced. Only rarely are there avoidable ‘errors’ such as human or system failures and such mistakes are made quite clear when they do occur.
Household Final Consumption Expenditure estimates published in Consumer Trends are a component of the GDP expenditure approach. However, the preliminary estimate for GDP is produced based on the GDP output approach. Historic experience shows that the output approach provides the best timely approach to measuring GDP growth. GDP growth according to the expenditure and income approaches is therefore brought into line with that recorded by output.
Further Quarterly National Accounts, Quarterly Sector Accounts and Financial Accounts tables are available in the United Kingdom Economic Accounts.
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