1. Main points

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.

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2. Summary of household expenditure in Quarter 3 (July to Sept) 2016

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.

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4. Household spending by product

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.

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5. Focus on prices in household expenditure

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.

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6. Household final consumption expenditure revisions Quarter 3 (July to Sept) 2016

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.

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

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.

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8 .Background notes

  1. Next edition:

    The next edition of Consumer trends, Quarter 4 (Oct to Dec) 2016, will be published on 31 Mar 2017. Estimates will be consistent with Blue Book 2016.

  2. Release policy

    Household final consumption expenditure estimates produced in Consumer trends are produced according to the national accounts timetable. The preliminary estimate of gross domestic product (GDP) for the fourth quarter of 2016 will be published on 26 January 2017, followed by the second estimate of GDP on 23 February 2017. The next full set of Quarterly National Accounts will be published on 31 March 2017.

  3. Main quality issues

    Household expenditure volume series are chainlinked annually. Estimates in this Consumer trends are now based on 2013 price structures; that is, the chained volume measure estimate in 2013 equals the current price value of expenditure in 2013.

    Growth in each year up to and including 2013 is calculated at average prices of the previous year. Growth from 2013 onwards is calculated at average prices of 2013. Volume series are only additive for the most recent periods; that is, annual data for 2013 onwards and quarterly data for Quarter 1 (Jan to Mar) 2014 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 clear when they do occur.

  4. Coherence

    Household final consumption expenditure estimates published in Consumer trends are a component of the gross domestic product (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 UK Economic Accounts.

    Details of the policy governing the release of new data are available by visiting the UK Statistics Authority website.

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Contact details for this Statistical bulletin

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