Consumer trends, UK: October to December 2017

• In Quarter 4 (Oct to Dec) 2017, household spending (adjusted for inflation) grew by 0.3% compared with Quarter 3 (July to Sept) 2017.

• The main contribution to growth can be seen in housing, which has increased by 0.4% compared with Quarter 3 2017.

• Household spending grew 1.2% in Quarter 4 2017, when compared with Quarter 4 2016.

• Household spending has increased by 1.7% in 2017 when compared with 2016.

• In Quarter 4 2017, current price spending increased by 0.9% compared with Quarter 3 2017.

The quarterly Consumer trends 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 2017. The article Changes to national accounts: actual rentals and imputed rentals published on 16 February 2017 gives detail on the major changes that affected household expenditure in Blue Book 2017.

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 is also available.

In Quarter 4 (Oct to Dec) 2017, the chained volume measure of household spending increased by 0.3%. The current price value of household spending increased by 0.9% compared with Quarter 3 (July to Sept) 2017. Figure 1 shows the levels of current price and volume spending from Quarter 1 (Jan to Mar) 1997 onwards.

In Quarter 4 2017, the value of household spending in current prices increased by 3.0% on the same quarter in 2016. When comparing the volume measure of household spending in Quarter 4 2017 with the same quarter in 2016, it increased by 1.2%.

Since the economic downturn in 2008 to 2009 (reaching its lowest point in Quarter 2 2009), household final consumption expenditure (HHFCE) has grown by 15.2% in volume terms. In current prices, it has grown by 36.1% (£85,869 million). This shows that whilst household spending has increased during this period, the volume of goods and services purchased by households has increased at a far lesser rate, indicating the effect of price inflation.

During 2017, quarterly growth remained on trend; however, household consumption remains relatively subdued with quarter-on-year growth of 1.2% slowing for the fifth consecutive quarter to be at its lowest rate since Quarter 1 2012. Household spending has increased by 1.7% in 2017 when compared with 2016. This is the lowest rate of annual growth since 2011, when growth in household spending decreased by 1.0%.

As illustrated in Figure 2, the main contributors to the 0.3% growth in consumer spending in Quarter 4 (Oct to Dec) 2017 were housing and recreation and culture, which both contributed 0.1%, partially offset by education, which contributed a small amount of negative growth.

The 0.11% contribution from housing was due to its growth of 0.4% quarter-on-quarter. Within that category, the growth was driven mainly by electricity, which grew by 4.4% quarter-on-quarter, contributing 0.05% to total domestic expenditure growth.

Recreation and culture, and transport are the next largest contributors to overall growth, each contributing 0.09% to the overall total growth.

At the most detailed level we record, Table 1 shows the areas that displayed the highest growth.

At this level, Table 2 shows the area that displayed the largest decline in Quarter 4 2017.

Figure 4 shows the contribution to growth for miscellaneous goods and services. The largest contributor to this negative growth is from insurance, although this has been offset by the positive growth in financial services.

In 2017, current price spending per head grew by £589 when compared with 2016, an increase of 3.1%. Total per-head spending has now reached £19,394 in 2017, with housing and transport making the largest contributions of £5,153 and £2,528 respectively. The third-largest contribution to overall per-head spending can be seen in miscellaneous, where spending in 2017 reached £2,499.

In current price terms, seasonally adjusted, consumer spending in Quarter 4 (Oct to Dec) 2017 has now reached £4,890 per head. This is an increase of £36 (positive 0.7%) per head when compared with Quarter 3 (July to Sept) 2017. In volume terms, there has been an increase of 0.1% per head, indicating that consumers spent more because they bought more in addition to the effect of increasing prices.

Comparing spending by types of goods and services (in current price terms), households have continued to spend most on services. In 2017, spending on services grew to its highest level since the start of the series, and is now at £11,214, contributing 58.3% of total household spending. Services includes spending on essential items such as housing and transport services.

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 4 (Oct to Dec) 2017, 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 3 (July to Sept) 2017) and the latest HHFCE estimates are summarised in Table 3. 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.

Family spending – This comes from the Living Costs and Food (LCF) Survey, which surveys households on their income and expenditure on consumer goods and services. We primarily use data from the LCF survey to compile household final consumption expenditure (HHFCE) data on food.

Annual Business Survey – This survey includes the turnover of businesses in the retail sector. We primarily use these data to compile HHFCE data on clothing and footwear.

Retail sales – This comes from the retail sales inquiry, which surveys businesses in the retail sector on their sales. We primarily use data from retail sales to assign a quarterly path to the annual figures received from the Annual Business Survey.

Quarterly National Accounts – Our data feeds into gross domestic product (GDP), for which it makes up roughly 60% of the expenditure measure. More details about this quarter’s GDP and its components are available in the latest GDP release. The quarterly national accounts release also contains analysis on the data included within this publication and its implications for the wider economy.

Further quarterly national accounts, quarterly sector accounts and financial accounts tables are available in the UK Economic Accounts.

We published an article detailing the change being made to the estimation of actual and imputed rentals (Classification of individual consumption by purpose (COICOPs) 04.1 and 04.2) in Blue Book 2017.

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 2017.

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 2015 price structures; that is, the chained volume measure estimate in 2015 equals the current price value of expenditure in 2015.

Growth in each year up to and including 2015 is calculated at average prices of the previous year. Growth from 2015 onwards is calculated at average prices of 2015. Volume series are only additive for the most recent periods; that is, annual data for 2015 onwards and quarterly data for Quarter 1 (Jan to Mar) 2016 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. 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.