Consumer trends, UK: January to March 2015

Household final consumption expenditure (HHFCE) for the UK, as a measure of economic growth. Includes all spending on goods and services by members of UK households.

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This is an accredited national statistic.

Contact:
Email David Matthewson

Release date:
30 June 2015

Next release:
To be announced

1. Main points

  • In quarter 1 2015 (Jan to Mar 2015), household spending (adjusted for inflation) grew by 0.9% (£2.3 billion)

  • The main contribution to growth can be seen in ‘Housing’, which includes ‘Electricity, gas and other fuels’ and ‘Imputed rentals’. This has increased by 1.1% compared with Q4 2014 (Oct to Dec 2014). The largest negative contribution to growth can be seen in ‘Miscellaneous goods and services’ which has fallen by 1.4% compared with Q4 2014 (Oct to Dec 2014)

  • Household spending in volume terms increased to £259.0 billion in Q4 2007 (Oct to Dec 2007) before falling to £244.1 billion in Q2 2009 (Apr to Jun 2009). It has now increased to £266.6 billion, the highest volume spending since the start of the series. In each quarter since Q2 2014 (Apr to Jun 2014) volume spending has exceeded the previous high in Q4 2007 (Oct to Dec 2007)

  • Household spending when compared with the same quarter a year ago has been showing positive growth each quarter since Q4 2011 (Oct to Dec 2011). It was 3.4% higher in Q1 2015 (Jan to Mar 2015), when compared with Q1 2014 (Jan to Mar 2014)

  • The current price value of household spending, which includes inflation, shows how much UK households spent. In Q1 2015 (Jan to Mar 2015), current price spending increased by 0.2% compared with Q4 2014 (Oct to Dec 2014)

  • The household expenditure implied deflator fell by 0.7% in Q1 2015 (Jan to Mar 2015) compared with the previous quarter (Oct to Dec 2014)

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2. Summary of household expenditure in Quarter 1 2015 (Jan to Mar 2015)

The volume measure provides an estimate of the amount of goods and services purchased by households. In quarter 1 2015 (Jan to Mar 2015), it increased by 0.9%. The current price value of household spending (inflation included) shows how much UK households spent. In quarter 1 2015 (Jan to Mar 2015), it increased by 0.2% compared with Q4 2014 (Oct to Dec 2014). Figure 1 compares the levels of current price and volume spending from 2008 onwards.

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4. Household spending by product

Figure 3 shows spending in volume terms (adjusted for inflation). Spending on ‘Housing’ has made the largest contribution to the positive growth in quarter 1 2015 (Jan to Mar 2015), increasing by 1.1% on the quarter. Within ‘Housing’,‘Electricity’ showed the largest increase of 11.1% compared with Q4 2014 (Oct to Dec 2014).

The largest negative contribution to growth over this quarter can be seen in ‘Miscellaneous goods and services’ which has fallen by 1.4% in volume terms. This is driven by decreased spending on ‘Life insurance’, which has fallen by 13.9%, reversing the increase in the previous quarter (Oct to Dec 2014). ‘Dwelling insurance’ has also fallen compared with Q4 2014 (Oct to Dec 2014) decreasing by 7.2%.

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5. Focus on prices in household expenditure

The household expenditure measure of prices is an important component of the GDP deflator which is used to determine price pressures in the economy. Figure 4 shows the household expenditure implied deflator both year on year and quarter on quarter percentage change.

This quarter, quarter 1 (Jan to Mar 2015) the seasonally adjusted household expenditure measure of prices, the implied deflator, fell by 0.7%. In addition to the effect of falling prices in some areas of expenditure in the latest quarter, particularly ‘Food and drink’ and ‘Transport’, the impact of the alignment of the household expenditure rental series with the CPIH deflator has subdued the level of current price data since 2012.

The household expenditure deflator (seasonally adjusted) is 0.8% higher than in Q1 2014 (Jan to Mar 2014).

From Blue Book 2011, the Consumer Price Index (CPI) has been used to deflate estimates of household expenditure. Figure 5 compares the household expenditure implied deflator growths in percentage terms, quarter on the same quarter a year ago, with those of the CPI from 2008 onwards.

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6. Household final consumption expenditure revisions, Quarter 1 2015 (Jan to Mar 2015)

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 quarter 1 2015 (Jan to Mar 2015), the revisions to total household final consumption expenditure have been made from Q1 2014 (Jan to Mar 2014).

Revisions between the previous edition of Consumer Trends, Q4 2014, (Oct to Dec 2014) and the latest HHFCE estimates are summarised in Table 1 ‘Revisions to Household Final Consumption Expenditure’. They reflect updated data from suppliers, as well as adjustments to HHFCE as a result of the GDP balancing process.

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7. Guidance and methodology

HHFCE terms and definitions are outlined in Table 2. Consumer Trends guidance offers fuller details regarding this publication.

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8 .Background notes

  1. Date of this publication: 30 June 2015

  2. Next Edition: The next edition of Consumer Trends, Q2 2015, will be published on 30 September 2015. Estimates will be consistent with Blue Book 2015.

  3. 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 second quarter of 2015 (Apr-Jun 2015) will be published on 28 July 2015, followed by the second estimate of GDP on 28 August 2015. The next full set of Quarterly National Accounts will be published on 30 September 2015.

  4. Basic quality information for consumer trends statistical bulletin

    Summary quality reports: A Summary Quality Report for this statistical bulletin can be found on our website.

    Main quality issues: Household expenditure volume series are chainlinked annually. Estimates in this consumer trends are now based on 2011 price structures i.e. the chained volume measure estimate in 2011 equals the current price value of expenditure in 2011.

    Growth in each year up to and including 2011 is calculated at average prices of the previous year. Growth from 2011 onwards is calculated at average prices of 2011. Volume series are only additive for the most recent periods, i.e. annual data for 2011 onwards and quarterly data for quarter one 2012 onwards.

    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.

  5. 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.

  6. Our compliance plan can be found on our website.

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  8. 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

  9. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gov.uk

    These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.

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9 . Methodology

Contact details for this Statistical bulletin

David Matthewson
consumer.trends@ons.gov.uk
Telephone: +44 (0)1633 45 5612