The volume measure provides an estimate of the amount of goods and services purchased by households. In Q2 2013 it increased by 0.3%, meaning it was 2.8% 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 Q2 2013 it increased by 0.9% compared with Q1 2013, meaning it was 15.1% higher than Q4 2007, the sixteenth 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.
The estimate of HHFCE where net tourism expenditure is included is called the UK national estimate. When net tourism is excluded, this produces the aggregate total UK domestic expenditure. Lower level analyses in this bulletin are based on the domestic concept. This is discussed in greater detail in Definitions and Conventions (48.6 Kb Pdf) for UK HHFCE.
Analysis in this section of the Statistical Release is conducted from 1997, the period from which a full HHFCE dataset is available.
From 1997, household final consumption expenditure:
In current prices, increased to £224.3 billion in Q1 2008, falling to £216.0 billion in Q2 2009, then returning to predominantly positive growth to reach £257.4 billion in the latest quarter.
In volume terms, increased to £242.1 billion in Q4 2007, falling to £226.4 billion in Q2 2009. It has now increased to £235.4 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 predominantly bought less, in volume terms. Since 2009, household spending has increased, but the volume of goods and services purchased has experienced far lower growth.
In Q2 2013, the value of household spending in current prices increased by 0.9% on the previous quarter, and by 4.3% on the same quarter in 2012. The volume measure of household spending increased by 0.3% on the quarter and 1.8% on the same quarter in 2012, signifying households are spending more for a relatively lower volume of goods and services.
In Q2 2013 the value of current price spending per head was £4,037, an increase of £29 on the previous quarter continuing the trend of positive growth started in Q3 2009. The volume measure per head increased by £3 in the same period, indicating 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 Q2 2009, the current price expenditure per head has continued to increase to reach the Q2 2013 level of £4,037, an increase of 10.3% when compared with the first peak of expenditure in Q1 2008.
The changes in spending per head after 2009 were mostly caused by price increases. The increase in the volume measure of spending since Q4 2011 shows that households have recently increased the underlying amount of goods and services they are purchasing.
‘Housing’ and ‘Transport’, the largest contributors to per head spending, have shown some of the largest per head increases this quarter, with ‘Housing’ increasing by £15 and ‘Transport’ by £12.
Within ‘Housing’, ‘Imputed rentals for housing’ is the largest component. ‘Imputed rentals’ are primarily owner-occupied rentals (a measure of what an owner would pay to rent their home). In the latest quarter, ‘Imputed rentals’ increased by £10 to £636. In volume terms, expenditure has remained flat.
Within ‘Transport’, the largest increase in spending per head can be seen in ‘Transport Services’ which includes spending on rail, road, air and sea transport. In current price terms, spending increased by £9 this quarter to £169, its highest ever level. This rise was offset by ‘Operation of vehicles’, the largest component of spending per head within ‘Transport’, which has decreased this quarter, with current price spending per head falling by £2 to £230.
In volume terms (adjusted for inflation), spending on ‘Transport’ has made the largest contribution to the positive growth in Q2 2013, increasing by 1.9% on the quarter. Within ‘Transport’ the purchase of ‘Motor Cars’ made the largest contribution, increasing by 4.5% on the quarter. This continues the strength in ‘Motor Cars’, which has shown positive volume growth since Q2 2011 and is now 7.2% higher than Q4 2007.
The largest negative contribution to growth this quarter can be seen in ‘Food and non-alcoholic beverages’, which has fallen by 2.2% in volume terms.
In Q2 2013, spending on technology (such as ‘Audio-visual, photographic & optical, and information processing equipment’) has continued the trend of strong volume spending, with weaker spending in current price terms. This suggests households are purchasing more technology but paying relatively less for it.
In Q2 2013 spending on ‘Audio-visual equipment’, which includes television, audio and related equipment, has grown by 1.0% when compared with Q1 2013 and 1.4% with the same period a year ago. In current price terms spending has fallen by 2.7% when compared with Q1 2013, and fallen 4.8% when compared with the same quarter of 2012.
Over the past year spending in volume terms on ‘Photographic & optical equipment’, which includes cameras, camcorders, binoculars, other optical and photographic equipment, shows the largest increase in percentage terms, with spending in Q2 2013 increasing by 15.1% when compared with the same period a year ago, while current price spending has decreased by 0.9% over the same period. When comparing Q2 2013 with the previous quarter, spending has increased by 2.8% in volume terms and 0.9% in current price terms.
The largest component of ‘Audio-visual, photo and information processing’, is ‘Information processing equipment’. This includes items such as PCs, laptops and printers. In volume terms, Q2 2013 has increased by 3.1% when compared with the previous quarter, and 7.6% when compared with the same quarter a year ago. In current price terms, Q2 2013 has increased by 1.0% when compared with Q1 2013, but has fallen by 1.2% when compared with the same quarter of the previous year.
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 Q2 2013, the revisions to total household final consumption expenditure have been made from the first quarter of 2012.
Revisions between the previous edition of Consumer Trends (Q1 2013) and the latest HHFCE estimates are summarised in Table 1 ‘Household Final Consumption Expenditure Revisions Q2 2013’. They reflect updated data from suppliers, as well as adjustments to HHFCE as a result of the GDP balancing process.
|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 : 26 September 2013.
Next Edition: The next edition of Consumer Trends, Q3 2013, will be published on 20 December 2013. Estimates will be consistent with Blue Book 2013.
Release policy. Household Final Consumption Expenditure estimates produced in Consumer Trends are produced according to the National Accounts timetable. The preliminary estimate of GDP for the third quarter of 2013 will be published on 25 October 2013, followed by the second estimate of GDP on 27 November 2013. The next full set of Quarterly National Accounts will be published on 20 December 2013.
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 ie 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.
Coherence. 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 information. Further Quarterly National Accounts, Quarterly Sector Accounts and Financial Accounts tables are available in the United Kingdom Economic Accounts.
Details of the policy governing the release of new data are available from the press office.
The ONS compliance plan can be found on the ONS website.
Code of practice. National Statistics are produced to high professional standards set out in the UK Statistics Authority's Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.
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