Consumer trends, UK : April to June 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 September 2015

Next release:
23 December 2015

1. Main points

  • In Quarter 2 (Apr to Jun) 2015, household spending (adjusted for inflation) grew by 0.8% (£2.3 billion)

  • The main contribution to growth can be seen in ‘Recreation and culture’, which includes ‘Games, toys and hobbies’. ‘Recreation and culture’ has increased by 3.2% compared with Quarter 1 (Jan to Mar) 2015. The largest negative contribution to growth can be seen in ‘Alcoholic beverages’ and ‘Electricity, gas and other fuels’

  • Household spending in volume terms increased to £267.4 billion in Quarter 4 (Oct to Dec) 2007 before falling to £250.8 billion in Quarter 2 (Apr to Jun) 2009. Following falls in 2010 and 2011, it has now increased to £276.6 billion, the highest volume spending since the start of the series. In each quarter since Quarter 2 (Apr to Jun) 2014, volume spending has exceeded the previous high in Quarter 4 (Oct to Dec) 2007

  • Household spending when compared with the same quarter a year ago has been showing positive growth each quarter since Quarter 4 (Oct to Dec) 2011. It was 3.1% higher in Quarter 2 (Apr to Jun) 2015, when compared with Quarter 2 (Apr to Jun) 2014

  • The current price value of household spending, which includes inflation, shows how much UK households spent. In Quarter 2 (Apr to Jun) 2015, current price spending increased by 1.0% compared with Quarter 1 (Jan to Mar) 2015

  • The household expenditure implied deflator increased by 0.1% in Quarter 2 (Apr to Jun) 2015 compared with the previous quarter (Jan to Mar) 2015

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2. Summary of household expenditure in quarter 2 (Apr to Jun) 2015

The volume measure provides an estimate of the amount of goods and services purchased by households. In Quarter 2 (Apr to Jun) 2015, it increased by 0.8%. The current price value of household spending (inflation included) shows how much UK households spent. In Quarter 2 (Apr to Jun) 2015, it increased by 1.0% compared with Quarter 1 (Jan to Mar) 2015. 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 ‘Recreation and culture’ has made the largest contribution to the positive growth in Quarter 2 (Apr to Jun) 2015, increasing by 3.2% on the previous quarter. Within ‘Recreation and culture’, ‘Games, toys and hobbies’ showed the largest increase of 4.9% compared with Quarter 1 (Jan to Mar) 2015.

The largest negative contribution to growth over this quarter can be seen in ‘Alcoholic beverages’. This is driven by decreased spending on ‘Wine’, which has fallen by 6.1%, continuing the trend from the previous quarter (Jan to Mar 2015). Within ‘Housing’, ‘Electricity, gas and other fuels’ has also fallen by 3.5% when compared with Q1 (Jan to Mar) 2015.

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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 (Apr to Jun) 2015, the seasonally adjusted household expenditure measure of prices, the implied deflator, increased by 0.1%, indicating the increased prices that households face when purchasing goods or services. 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 0.6% higher than in Quarter 2 (Apr to Jun) 2014.

From Blue Book 2011, the Consumer Prices 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 2 (Apr to Jun) 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 2 (Apr to Jun) 2015, the revisions to total household final consumption expenditure have been made in line with the revisions policy for Blue Book 2015. "Impact of Blue Book 2015 Changes on Current Price Gross Domestic Product Estimates, 1997 to 2010" provides an explanation of the method changes introduced in Blue Book 2015.

Revisions between the previous edition of Consumer Trends (Quarter 1 (Jan to Mar) 2015) and the latest HHFCE estimates are summarised in Table 1 ‘Revisions to Household Final Consumption Expenditure’. As well as changes arising from new international standards and guidelines, the revisions reflect methodological changes in the compilation of estimates, 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 ‘Changes to National Accounts Blue Book 2015: Improvements to Household Expenditure Estimates’ provides more information on what Supply and Use balancing is, and how it affects HHFCE estimates in Blue Book 2015.

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.

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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. Next edition

    The next edition of Consumer Trends, Quarter 3 (Jul to Sep) 2015, will be published on 23 December 2015. Estimates will be consistent with Blue Book 2015

  2. What’s new

    The article ‘Changes to National Accounts Blue Book 2015: Improvements to Household Expenditure Estimates’ has been published as part of this release

  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 third quarter of 2015 (Jul to Sep 2015) will be published on 27 October 2015, followed by the second estimate of GDP on 27 November 2015. The next full set of quarterly national accounts will be published on 23 December 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

  5. Main quality issues

    Household expenditure volume series are chain linked annually. Estimates in this consumer trends are now based on 2012 price structures, that is the chained volume measure estimate in 2012 equals the current price value of expenditure in 2012

    Growth in each year up to and including 2012 is calculated at average prices of the previous year. Growth from 2012 onwards is calculated at average prices of 2012. Volume series are only additive for the most recent periods, that is annual data for 2012 onwards and quarterly data for quarter one 2013 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

  6. 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. Due to differences in low level rounding, national chained volume measure data presented in these tables will vary from those presented in the quarterly national accounts bulletin

  7. 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 our media relations office

    Our compliance plan can be found on our website

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  9. 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

  10. Contact Details:

    For information about the content of this publication, contact David Matthewson

    Tel: +44 (0)1633 45 5612

    Email: consumer.trends@ons.gov.uk

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    Details of the policy governing the release of new data are available by visiting the U.K Statistics Authority or from the Media Relations Office

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

  12. 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