Consumer trends, UK : January to March 2016

Household final consumption expenditure (HHFCE) for the UK, as a measure of economic growth. Includes all spending on goods and services by members of UK households.

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Cyswllt:
Email Gareth Powell

Dyddiad y datganiad:
30 June 2016

Cyhoeddiad nesaf:
30 September 2016

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.

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2. 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.

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4. 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.

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5. 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.

From 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.

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6. 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.

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. Guidance and methodology

HHFCE terms and definitions are outlined in Table 2. Consumer Trends guidance offers fuller details regarding this publication.

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.Background notes

  1. What’s new:

    The article Changes to National Accounts Blue Book 2016: Improvements to Household Expenditure Estimates has been published as part of this release.

  2. Release policy

    Household final consumption expenditure estimates produced in Consumer trends are produced according to the National Accounts timetable. The preliminary estimate of GDP for the second quarter of 2016 (Apr to June 2016) will be published on 27 July 2016, followed by the second estimate of GDP on 26 August 2016. The next full set of Quarterly National Accounts will be published on 30 September 2016.

  3. Basic Quality Information for Consumer Trends Statistical Bulletin

    Summary Quality reports

    A Quality and Methodology Information report for this statistical bulletin can be found on our website.

  4. 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 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 quite clear when they do occur.

  5. Coherence

    Household final consumption expenditure estimates published in Consumer trends are a component of the 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.

  6. 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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. Methodology

Manylion cyswllt ar gyfer y Bwletin ystadegol

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