Household final consumption expenditure (HHFCE) within the context of the UK National Accounts is defined as personal expenditure on goods and services, including imputed rent of owner-occupied dwellings, the administrative costs of non-life insurance and life insurance, and superannuation schemes. Business expenditure and expenses, interest and other transfer payments and capital expenditure on dwellings are all excluded from household final consumption.
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. These and other points that affect the general definition of HHFCE are discussed in greater detail in definitions and conventions for UK HHFCE.Back to table of contents
The expenditure information contained within the consumer trends release is used by a range of public and private bodies as well as individuals. An example is the use of implied deflators. These are an important measure of price pressures for goods and services within the UK economy and are therefore useful to government policymakers and the Bank of England.
The total, national household final consumption expenditure (HHFCE) estimate contained in consumer trends accounts for approximately 60% of the gross domestic product (GDP) expenditure measure produced as part of the UK output, income and expenditure and quarterly national accounts statistical bulletins.
HHFCE estimates from the consumer trends release are also used in our other statistical outputs and releases, including the household saving ratio, the Effects of taxes and benefits on UK household income and Annual Abstract of Statistics. HHFCE estimates are used by the private sector to analyse demand for different goods and services, for example, we have provided further detail on the changes in household expenditure on fuel to consultancy firms.
We welcome feedback and suggestions on this release through the email address firstname.lastname@example.org.Back to table of contents
The quarterly and annual estimates of household final consumption expenditure (HHFCE) at current and previous year prices are built up commodity by commodity from a variety of independent sources. Each component series within HHFCE is individually seasonally adjusted in current price and volume terms.
The main sources of data used to compile HHFCE estimates are the Retail Sales Inquiry (RSI) and the Living Costs and Food Survey (LCF). Further detail, including the strengths and weaknesses of source data, are considered in HHFCE sources (PDF, 171KB).Back to table of contents
In the consumer trends release, household final consumption expenditure (HHFCE) estimates are categorised according to international classification of individual consumption by purpose (COICOP) standards. More information on COICOP classification can be found in Classification of household consumption headings (PDF, 134KB) and from the UN Statistics Division.
The categories with COICOP codes are as follows:
01 Food and non-alcoholic beverages
02 Alcoholic beverages, tobacco and narcotics
03 Clothing and footwear
04 Housing, water, electricity, gas and other fuels
05 Furnishings, household equipment and routine household maintenance
09 Recreation and culture
11 Restaurants and hotels
12 Miscellaneous goods and services
Tables are also presented for durable goods, semi-durable goods, non-durable goods and services using COICOP divisions.
Each table has six variants, denoted by a suffix:
CN for current prices, not seasonally adjusted
CS for current prices, seasonally adjusted
KN for chained volumes, not seasonally adjusted
KS for chained volumes, seasonally adjusted
DN for implied deflators, not seasonally adjusted
DS for implied deflators, seasonally adjusted
Implied deflators are an indirect measure of inflation and are presented in the consumer trends briefing.Back to table of contents
An analysis of revisions to the main household expenditure series – growth rates of total expenditure at current prices and in chained volume terms – appears at the end of the consumer trends statistical bulletin.Back to table of contents
Removal of historic link factors and improvements to household expenditure exhaustiveness
In the early 2000s, the Living Costs and Food Survey (LCF) and Annual Business Survey (ABS) went through significant changes, so link factors were introduced to remove structural breaks in the historical estimates. With more recent survey estimates having been collected, these link factors are no longer required. Blue Book 2021 implements the removal of these adjustments, whereby data prior to the early 2000s are modified to align to current levels.
This has led to a reduction in national accounts balancing adjustments and improved alignment for the expenditure approach to GDP, leading to revisions to Household Final Consumption Expenditure (HHFCE) on various classification of individual consumption by purpose (COICOP). To achieve improved exhaustiveness of HHFCE, this publication includes uplifts to account for diary fatigue in the LCF and ABS-sourced retail sales by non-retail businesses.
COICOPs affected include (but are not limited to) Telephone Equipment (COICOP 08.2), Other Recreational Items and equipment, gardens and pets (09.3), Newspapers, books and stationery (09.5), Canteens (11.1.2) and Personal Effects (12.3).
Additionally, there have been methods changes to estimates of household spending on machine and remote gambling (COICOP 09.4.3), and maintenance and repair of major durables. (COICOP 09.2.3)
Financial Services Survey Improvements
Improvements have been made to the quality of estimates for financial services using information from the Financial Services Survey (FSS), including the output and intermediate consumption of other financial institutions and financial auxiliaries. This in turn has led to improved estimates of the HHFCE of these financial services, which primarily impacts and increases the consumption Financial Services other than FISIM (COICOP 12.6.2) considerably throughout the time series.
A separate article has been written by ONS with further details on FSS methods changes
Clothing and Telecoms Deflators
Enhancements have been made to the Consumer Price Inflation (CPI) deflator used for Clothing Garments (COICOP 03.1.2) and Telephone Services (COICOP 08.3) as it was found that the inflation over time of these COICOPs were underestimated. The impacts of this revision can be observed in the Chain Volume Measure (CVM) estimates of these COICOPs.Back to table of contents
The household final consumption expenditure (HHFCE) estimates in the consumer trends release are consistent with those appearing at Tables E1 to E4 of the quarterly national accounts statistical bulletin for the same period.Back to table of contents
This section outlines some of the main outputs and responsibilities of the Office for National Statistics (ONS) HH Delivery and Development Branches in producing household final consumption expenditure (HHFCE) estimates.
It also summarises what work is underway within the ONS to further develop and improve the outputs to address existing limitations and also prepare for future changes (including the implementation of European statistical requirements). This will help users understand the limitations of the currently published estimates but also highlight developments that will improve the estimates. As progress is made with the improvements listed here, we will provide updates and share information on the extent of planned revisions.
Main outputs and responsibilities for household final consumption expenditure
Primary objectives of HH Delivery and Development teams in producing household expenditure estimates
HHFCE is part of national accounts. As such, the team’s responsibilities include:
processing of HHFCE estimates to be included in the quarterly gross domestic product (GDP) releases
providing supply and use balanced HHFCE estimates for the annual Blue Book; a description of the supply and use process can be found in the input–output supply and use tables
reviewing methodology in household expenditure for national accounts to ensure a robust set of estimates
publishing consumer trends and HHFCE estimates, presenting a comprehensive set of estimates of household final consumption quarterly, in line with the national accounts schedule
producing estimates that conform to the European System of Accounts 2010 (ESA 2010) classification of individual consumption by purpose (COICOP)
producing and delivering HHFCE data to Eurostat – this delivery is required to comply with European legislation
Contact details for this Methodology
Telephone: +44(0)1633 455864