In Quarter 3 (July to Sept) 2016, household spending (adjusted for inflation) grew by 0.7% (£2.1 billion) compared with Quarter 2 (Apr to June) 2016.
The main contribution to growth can be seen in “Miscellaneous”, this has increased by 2.6% compared with Quarter 2 2016.
Household spending in volume terms increased to £277.1 billion in Quarter 4 (Oct to Dec) 2007 before falling to £260.1 billion in Quarter 2 2009. Following falls in 2010 and 2011, it increased to £292.6 billion in Quarter 3 2016, the highest volume spending since the start of the series. In each quarter since Quarter 3 2014, volume spending has exceeded the previous high in Quarter 4 2007.
Household spending when compared with the same quarter a year ago has been showing positive growth each quarter since Quarter 4 2011. It was 2.6% higher in Quarter 3 2016, when compared with Quarter 3 2015.
The current price value of household spending, which includes inflation, shows how much UK households spent. In Quarter 3 2016, current price spending increased by 1.2% compared with Quarter 2 2016.
The household expenditure implied deflator increased by 0.6% in Quarter 3 2016 compared with the previous quarter, April to June 2016.Back to table of contents
The volume measure provides an estimate of the amount of goods and services purchased by households. In Quarter 3 (July to Sept) 2016, it increased by 0.7%. The current price value of household spending (inflation included) shows how much UK households spent. In Quarter 3 2016, it increased by 1.2% compared with Quarter 2 (Apr to June) 2016. Figure 1 compares the levels of current price and volume spending from Quarter 3 2010 onwards.Back to table of contents
Household final consumption expenditure (HHFCE) includes spending on goods and services except for buying or extending a house, investment in valuables (paintings, antiques etc) 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 2 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 for UK HHFCE.
From 1997, household final consumption expenditure:
- in current prices, increased to £244.8 billion in Quarter 2 (Apr to June) 2008, falling to £235.2 billion in Quarter 2 2009, then returning to positive growth primarily in each quarter since Quarter 3 (July to Sept) 2009 to reach £302.2 billion in the latest quarter, July to Sept 2016
- in volume terms, increased to £277.1 billion in Quarter 4 (Oct to Dec) 2007, falling to £260.1 billion in Quarter 2 2009; following falls in 2010 and 2011, it has now increased to £292.6 billion, the highest volume spending since the start of the series; in each quarter since Quarter 3 2014, volume spending has exceeded the previous high in Quarter 4 2007
The pre-2007 increases in household spending were a consequence of households predominantly facing higher prices and buying more goods and services. 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 less growth.
In Quarter 3 2016, the value of household spending in current prices increased by 1.2% on the previous quarter, April to June 2016, and by 4.1% on the same quarter, July to Sept, in 2015. The volume measure of household spending increased by 0.7% on the quarter, July to September, 2016 compared with the previous quarter, April to June, 2016. When comparing the volume measure of household spending in Quarter 3 2016 with the same quarter in 2015 it increased by 2.6%.Back to table of contents
Figure 3 shows spending in volume terms (adjusted for inflation). Spending on “Miscellaneous” has made the largest contribution to the positive growth in Quarter 3 (July to Sept) 2016, increasing by 2.6% on the previous quarter. Within this area, “Other products for personal care” showed the largest increase of 3.8% compared with Quarter 2 (Apr to June) 2016.Back to table of contents
The household expenditure measure of prices is an important component of the gross domestic product (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, July to September 2016, the seasonally adjusted household expenditure measure of prices, the implied deflator, increased by 0.6% compared with Quarter 2 (Apr to June) 2016, indicating the increase in prices that households face when purchasing goods or services.
The household expenditure deflator (seasonally adjusted) is 1.5% higher than in Quarter 3 (July to Sept) 2015.
From the 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-quarter a year ago, with those of the CPI from Quarter 3 2010 onwards.Back to table of contents
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) 2016, the revisions to total household final consumption expenditure have been made from Quarter 1 (Jan to Mar) 2015.
Revisions between the previous edition of Consumer Trends (Quarter 2 2016) and the latest HHFCE estimates are summarised in Table 1: Household final consumption expenditure: revisions. The revisions reflect updated data from suppliers, as well as adjustments to HHFCE as a result of the GDP balancing process.
Table 1: Household Final Consumption Expenditure Revisions, Quarter 3 (July to Sept) 2016
|Revisions to value (current prices)||Revisions to growth (current prices)||Revisions to growth (volume measure)|
|Source: Office for National Statistics|
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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.Back to table of contents
The Consumer Trends Quality and Methodology Information document contains important information on:
- the strengths and limitations of the data
- the quality of the output: including the accuracy of the data and how it compares with related data
- uses and users
- how the output was created
HHFCE terms and definitions are outlined in Table 2. Consumer trends guidance offers fuller details regarding this publication.
Table 2: Table of Household Final Consumption Expenditure Terms and Definitions
|COICOP||Classification of individual consumption by purpose. COICOP is an internationally agreed system of classification for reporting consumption expenditure within national accounts and is used by other household budget surveys across the European Union|
|CPI||Consumer price index. Measures the price paid by consumers for a fixed group of goods and services.|
|GDP||Gross domestic product. The measure of all services and goods produced in a country over a specific period.|
|HHFCE||Household final consumption expenditure. Spending by households on products or services to satisfy their immediate needs or wants. This includes expenditure on the administrative costs of insurances but excludes capital expenditure on dwellings and valuables.|
|SA||Seasonally adjusted. Seasonal adjustment removes the variations associated with the time of the year, i.e. seasonal effects; this allows consecutive quarters to be compared, providing a reliable estimate of short-term change.|
|CP||Current price. Current price series (also known as nominal, cash or value series) are expressed in terms of the prices of the time period being estimated. In short, they describe the actual price charged or paid for the goods or services at time of production or consumption.|
|CVM||Chained volume measure. This measure allows users to identify changes in expenditure on a good (or service) resulting from a change in the volume, rather than a change in the price of that good (or service).|
|IDEF||Implied deflator. An indirect measure of inflation. Calculated as current price data divided by chained volume measure data, multiplied by 100.|
|Domestic estimate||Household final consumption expenditure (HHFCE) aggregate total excluding net tourism|
|National estimate||Estimate of Household final consumption expenditure (HHFCE) including net tourism expenditure.|
|TOUREX||Estimates for foreign tourist expenditure in the UK.|
|TOURIM||Estimates for UK tourist expenditure abroad.|
|Source: Office for National Statistics|
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