Table of contents
- Main points
- Summary of household expenditure in Quarter 1 (Jan to Mar) 2016
- Trends in household expenditure
- Household spending by product
- Focus on prices in household expenditure
- Household final consumption expenditure revisions Quarter 1 (Jan to Mar) 2016
- Guidance and methodology
- Background notes
- Methodology
1. Main points
In Quarter 1 (Jan to Mar) 2016, household spending (adjusted for inflation) grew by 0.7% (£2.1 billion) compared with Quarter 4 (Oct to Dec) 2015.
The main contribution to growth can be seen in “Housing, water, electricity, gas and other fuels”; this has increased by 0.9% compared with Quarter 4 (Oct to Dec) 2015. “Alcoholic beverages, tobacco and narcotics” was the largest area showing small negative contributions to the overall growth in the current quarter, Jan to Mar 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 (Apr to June) 2009. Following falls in 2010 and 2011, it has now increased to £288.9 billion in Quarter 1 (Jan to Mar) 2016, the highest volume spending since the start of the series. In each quarter since Quarter 3 (July to Sept) 2014, volume spending has exceeded the previous high in Quarter 4 (Oct to Dec) 2007.
Household spending when compared with the same quarter a year ago has been showing positive growth each quarter since Quarter 4 (Oct to Dec) 2011. It was 2.8% higher in Quarter 1 (Jan to Mar) 2016, when compared with Quarter 1 (Jan to Mar) 2015.
The current price value of household spending, which includes inflation, shows how much UK households spent. In Quarter 1 (Jan to Mar) 2016, current price spending increased by 0.8% compared with Quarter 4 (Oct to Dec) 2015.
The household expenditure implied deflator increased by 0.1% in Quarter 1 (Jan to Mar) 2016 compared with the previous quarter, Oct to Dec 2015.
Back to table of contents2. Summary of household expenditure in Quarter 1 (Jan to Mar) 2016
The volume measure provides an estimate of the amount of goods and services purchased by households. In Quarter 1 (Jan to Mar) 2016, it increased by 0.7%. The current price value of household spending (inflation included) shows how much UK households spent. In Quarter 1 (Jan to Mar) 2016, it increased by 0.8% compared with Quarter 4 (Oct to Dec) 2015. Figure 1 compares the levels of current price and volume spending from 2010 onwards.
Figure 1: Quarterly household final consumption expenditure total
UK, Quarter 1 (Jan to Mar) 2010 to Quarter 1 (Jan to Mar) 2016
Source: Office for National Statistics
Download this chart Figure 1: Quarterly household final consumption expenditure total
Image .csv .xls3. Trends in household expenditure
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 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.
Figure 2: Annual household final consumption expenditure
UK, 1997 to 2015
Source: Office for National Statistics
Download this chart Figure 2: Annual household final consumption expenditure
Image .csv .xlsFrom 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 (Apr to June) 2009, then returning to positive growth primarily in each quarter since Quarter 3 (July to Sept) 2009 to reach £295.5 billion in the latest quarter, Jan to Mar 2016
in volume terms, increased to £277.1 billion in Quarter 4 (Oct to Dec) 2007, falling to £260.1 billion in Quarter 2 (Apr to June) 2009; following falls in 2010 and 2011, it has now increased to £288.9 billion, the highest volume spending since the start of the series; in each quarter since Quarter 3 (July to Sept) 2014, volume spending has exceeded the previous high in Quarter 4 (Oct to Dec) 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 lower growth.
In Quarter 1 (Jan to Mar) 2016, the value of household spending in current prices increased by 0.8% on the previous quarter, Oct to Dec 2015 and by 3.1% on the same quarter (Jan to Mar) in 2015. The volume measure of household spending increased by 0.7% on the quarter (Jan to Mar) 2016 compared with the previous quarter. When comparing the volume measure of household spending in Quarter 1 (Jan to Mar) 2016 with the same quarter (Jan to Mar) in 2015, it increased by 2.8%.
Back to table of contents4. Household spending by product
Figure 3 shows spending in volume terms (adjusted for inflation). Spending on “Housing” has made the largest contribution to the positive growth in Quarter 1 (Jan to Mar) 2016, increasing by 0.9% on the previous quarter. Within this area, “Electricity” showed the largest increase of 6.7% compared with Quarter 4 (Oct to Dec) 2015.
The largest negative contribution to growth over this quarter can be seen in “Alcoholic beverages, tobacco and narcotics” which has fallen by 0.6% in volume terms. This is driven by decreased spending on “Wine, cider and perry”, which has fallen by 2.4% compared with the previous quarter, Oct to Dec 2015.
Figure 3: Classification of Individual Consumption by Purpose contribution to overall growth, domestic measure, chained volume measure, seasonally adjusted
UK, Quarter 1(Jan to Mar) 2016
Source: Office for National Statistics
Download this chart Figure 3: Classification of Individual Consumption by Purpose contribution to overall growth, domestic measure, chained volume measure, seasonally adjusted
Image .csv .xls5. Focus on prices in household expenditure
The household expenditure measure of prices is an important component of the 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, Jan to Mar 2016, the seasonally adjusted household expenditure measure of prices, the implied deflator, increased by 0.1% compared with Quarter 4 (Oct to Dec) 2015, indicating the increase in prices that households face when purchasing goods or services.
The household expenditure deflator (seasonally adjusted) is 0.2% higher than in Quarter 1 (Jan to Mar) 2015, which is broadly in line with recent CPI data.
Figure 4: Household expenditure implied deflator, seasonally adjusted
UK, Quarter 1 (Jan to Mar) 2010 to Quarter 1 (Jan to Mar) 2016
Source: Office for National Statistics
Download this chart Figure 4: Household expenditure implied deflator, seasonally adjusted
Image .csv .xlsFrom the Blue Book 2011, 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 2010 onwards.
Figure 5: Household expenditure implied deflator versus CPI, not seasonally adjusted, quarter-on-quarter a year ago
UK, Quarter 1 (Jan to Mar) 2010 to Quarter 1 (Jan to Mar) 2016
Source: Office for National Statistics
Download this chart Figure 5: Household expenditure implied deflator versus CPI, not seasonally adjusted, quarter-on-quarter a year ago
Image .csv .xls6. Household final consumption expenditure revisions Quarter 1 (Jan to Mar) 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 1 (Jan to Mar) 2016, the revisions to total household final consumption expenditure have been made in line with the revisions policy for Blue Book 2016. Impact of Blue Book 2016 changes on current price and chained volume measure Gross Domestic Product estimates, 1997 to 2014 provides an explanation of the methods changes introduced in Blue Book 2016.
Revisions between the previous edition of Consumer Trends (Quarter 4 (Oct to Dec) 2015) and the latest HHFCE estimates are summarised in Table 1 “Revisions to Household Final Consumption Expenditure”. The revisions reflect methodological changes in the compilation of estimates, updated data from suppliers, as well as adjustments to HHFCE as a result of Supply and Use balancing and the GDP balancing process. The article Changes to National Accounts Blue Book 2016: Improvements to Household Expenditure Estimates provides more information on what Supply and Use balancing is, and how it affects HHFCE estimates in Blue Book 2016.
Table 1: Household final consumption expenditure revisions
| UK, Quarter 1 (Jan to Mar) 2016 | ||||||||||
| £ million | % | % | ||||||||
| Revisions to value (current prices) | Revisions to growth (current prices) | Revisions to growth (volume measure) | ||||||||
| 2014 | 7,238 | -0.4 | -0.4 | |||||||
| 2015 | 5,608 | -0.2 | -0.2 | |||||||
| 2014 Q1 | 2,497 | 0.2 | -0.3 | |||||||
| 2014 Q2 | 1,200 | -0.5 | -0.4 | |||||||
| 2014 Q3 | 3,223 | 0.7 | 0.8 | |||||||
| 2014 Q4 | 318 | -1 | -0.8 | |||||||
| 2015 Q1 | 2,288 | 0.7 | _ | |||||||
| 2015 Q2 | 1,686 | -0.2 | _ | |||||||
| 2014 Q3 | 1,859 | 0.1 | 0.2 | |||||||
| 2015 Q4 | -231 | -0.7 | _ | |||||||
| Source: Office for National Statistics | ||||||||||
Download this table Table 1: Household final consumption expenditure revisions
.xls (26.1 kB)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 contents7. Guidance and methodology
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
| UK | ||||
| Term | Description | |||
| 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 | HHFCE aggregate total excluding net tourism | |||
| National estimate | Estimate of 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 | ||||