Consumer trends, UK: July to September 2018

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 Gareth Powell

Release date:
21 December 2018

Next release:
29 March 2019

1. Main points

  • In Quarter 3 (July to Sept) 2018, household spending (adjusted for inflation) grew by 0.5% compared with Quarter 2 (Apr to June) 2018.

  • The main contributor to growth was miscellaneous goods and services, which increased by 2% compared with Quarter 2 2018.

  • Household spending grew by 1.8% in Quarter 3 2018 compared with Quarter 3 2017.

  • Current price spending grew by 1.1% in Quarter 3 2018 compared with Quarter 2 2018.

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2. Things you need to know about this release

The quarterly Consumer trends data are typically published around 90 days after the end of the quarter.

Unless otherwise stated all figures are chained volume measure, seasonally adjusted.

The data are consistent with Blue Book 2018.

Household final consumption expenditure (HHFCE) includes spending on goods and services except for: buying or extending a house, investment in valuables (for example, paintings and antiques) or purchasing second-hand goods. Explanations for these exceptions and the related concepts are available in Consumer trends guidance and methodology.

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 gross domestic product (GDP). There are two measures:

  • current prices – also known as nominal, cash or value series are expressed in terms of the prices of the time period being estimated

  • chained volume measure – this measure removes the effects of inflation

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 for UK HHFCE (Word, 58KB).

Time series data for Consumer trends are also available.

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3. Household spending (adjusted for inflation) grew by 0.5% in Quarter 3 2018

In Quarter 3 (July to Sept) 2018, the chained volume measure of household spending increased by 0.5%. The current price value of household spending increased by 1.1% compared with Quarter 2 (Apr to June) 2018. Figure 1 shows the levels of current price and volume spending from Quarter 1 (Jan to Mar) 1997 onwards.

In Quarter 3 2018, the volume measure of household spending increased by 1.8% on the same quarter in 2017. When comparing the value of household spending in current prices in Quarter 3 2018 with the same quarter in 2017, it increased by 4.4%.

Although there have been positive revisions to the quarterly path in 2017, the annual year-on-year volume growth has decreased (2.19%), breaking the upward trend shown since 2011 (negative 0.9%). See Table 1.

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4. What are the main contributors to top-level growth?

Figure 2 illustrates the main contributors to the 0.5% domestic growth in consumer spending in Quarter 3 (July to Sept) 2018. The largest contributor was miscellaneous goods and services, which contributed 0.27%.

As illustrated in Figure 3, the 0.27% contribution from miscellaneous goods and services was due to its growth of 2% quarter-on-quarter. The main driver was financial services other than financial intermediation services indirectly measured (FISIM), which grew by 5.4% quarter-on-quarter and contributed 0.13% to total domestic expenditure growth.

At the most detailed level we record, Table 2 shows the areas that displayed the highest growth in the latest quarter. In this quarter both areas are from the larger contributor category: miscellaneous goods and services.

The increase in volume in financial services other than FISIM was due mainly to a decrease in the deflator growth (negative 3.6%) from Quarter 2 (Apr to June) 2018 to Quarter 3 2018. The fall in prices reflected in the deflator was probably caused by a slowdown in the charges received by unit trusts providers. This change in the deflator affected only the volume while the current price remained on trend.

Table 3 shows the areas that displayed the largest declines in Quarter 3 2018.

Motor cars is at the lowest since Quarter 4 (Oct to Dec) 2013. The decrease is consistent with the Society of Motor Manufacturers and Traders publication and the Bank of England Inflation report (November 2018). Both publications confirmed a deep fall in the number of vehicles registered in September, due mostly to problems with the supply caused by the introduction of new emissions regulations.

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5. Household final consumption expenditure revisions, Quarter 3 2018

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 3 (July to Sept) 2018, the revisions to total household final consumption expenditure have been made from Quarter 1 (Jan to Mar) 2017.

Revisions between the previous edition of Consumer trends (Quarter 2 (April to June) 2018) and the latest HHFCE estimates are summarised in Table 4. The revisions reflect methodological changes in the compilation of estimates, updated data from suppliers, as well as adjustments to HHFCE as a result of the GDP balancing process.

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.

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7. Quality and methodology

Consumer trends guidance offers fuller details regarding this publication.

We have published a Quality and Methodology Information report for this statistical bulletin and details on changes to estimates and methodology in Blue Book 2018.

The Consumer trends Quality and Methodology Information report contains important information on:

  • the strengths and limitations of the data and how it compares with related data

  • uses and users of the data

  • how the output was created

  • the quality of the output including the accuracy of the data.

Full information on the Classification of individual consumption by purpose (COICOP) classification system can be found on the United Nations Statistics Division website.

Quality of the estimates

Household expenditure volume series are chain-linked annually. Estimates in this Consumer trends bulletin are now based on 2016 price structures; that is, the chained volume measure estimate in 2016 equals the current price value of expenditure in 2016.

Growth in each year up to and including 2016 is calculated at average prices of the previous year. Growth from 2016 onwards is calculated at average prices of 2016. Volume series are only additive for the most recent periods; that is, annual data for 2016 onwards and quarterly data for Quarter 1 (Jan to Mar) 2017 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 that 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 clear when they do occur.

Coherence

Household final consumption expenditure estimates published in Consumer trends are a component of the gross domestic product (GDP) expenditure approach. The GDP estimates contain data from three different approaches (output, expenditure and income approach). In the UK, the estimates of the three approaches are balanced to produce the best estimate of GDP.

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Contact details for this Statistical bulletin

Gareth Powell
consumer.trends@ons.gov.uk
Telephone: +44 (0)1633 455969