Consumer trends, UK: October to December 2015

Spending on goods and services by UK households including household final consumption expenditure (HHFCE) as a measure of economic growth.

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Cyswllt:
Email Gareth Powell

Dyddiad y datganiad:
31 March 2016

Cyhoeddiad nesaf:
30 June 2016

1. Main points

In Quarter 4 (Oct to Dec) 2015, household spending (adjusted for inflation) grew by 0.6% (£1.7 billion) compared with Quarter 3 (July to Sept) 2015.

The main contribution to growth can be seen in “Household goods and services”, which has increased by 3.4% compared with Quarter 3 (July to Sept) 2015. “Health”, “Miscellaneous” and “Housing” were the only areas showing small negative contributions to the overall growth in the current quarter (Oct to Dec) 2015.

Household spending in volume terms increased to £267.4 billion in Quarter 4 (Oct to Dec) 2007 before falling to £250.8 billion in Quarter 2 (Apr to June) 2009. Following falls in 2010 and 2011, it has now increased to £279.1 billion, the highest volume spending since the start of the series. In each quarter since Quarter 2 (Apr to June) 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 2.7% higher in Quarter 4 (Oct to Dec) 2015, when compared with Quarter 4 (Oct to Dec) 2014.

Household spending in volume terms has increased by 2.8% in 2015 when compared with 2014. This is the highest annual growth in volume terms since 2007.

The current price value of household spending, which includes inflation, shows how much UK households spent. In Quarter 4 (Oct to Dec) 2015, current price spending increased by 1.9% compared with Quarter 3 (July to Sept) 2015.

The household expenditure implied deflator increased by 1.3% in Quarter 4 (Oct to Dec) 2015 compared with the previous quarter (July to Sept) 2015.

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2. Summary of household expenditure in Quarter 4 (Oct to Dec) 2015

The volume measure provides an estimate of the amount of goods and services purchased by households. In Quarter 4 (Oct to Dec) 2015, it increased by 0.6%. The current price value of household spending (inflation included) shows how much UK households spent. In Quarter 4 (Oct to Dec) 2015, it increased by 1.9% compared with Quarter 3 (July to Sept) 2015. Figure 1 compares the levels of current price and volume spending from 2009 onwards.

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4. Household spending by product

Figure 3 shows spending in volume terms (adjusted for inflation). Spending on “Household goods and services” has made the largest contribution to the positive growth in Quarter 4 (Oct to Dec) 2015, increasing by 3.4% on the quarter. Within this area, “Major household appliances” showed the largest increase of 10.7% compared with Quarter 3 (July to Sept) 2015.

The largest negative contribution to growth over this quarter can be seen in “Housing”, which has fallen by 0.4% in volume terms. This is driven by decreased spending on “Gas”, which has fallen by 9.8% compared with the previous quarter (July to Sept) 2015, possibly due to milder than average Quarter 4 (Oct to Dec) 2015 temperatures.

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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 (Oct to Dec) 2015, the seasonally adjusted household expenditure measure of prices, the implied deflator, increased by 1.3% compared with Quarter 3 (July to Sept) 2015, indicating the increase in prices that households face when purchasing goods or services. The impact of the alignment of the household expenditure rental series with the CPIH deflator has subdued the level of current price data since 2012.

The household expenditure deflator (seasonally adjusted) is 0.4% higher than in Quarter 4 (Oct to Dec) 2014, 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 2009 onwards.

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6. Household spending per head

In current price terms, seasonally adjusted, consumer spending in Quarter 4 (Oct to Dec) 2015 has now reached £4,491 per head. This is an increase of £75 (1.7%) per head when compared with Quarter 3 (July to Sept) 2015. In volume terms, there has been an increase of 0.4% per head, indicating that consumers spent more because they bought more in addition to the effect of increasing prices.

In 2015, current price spending per head grew by £381 when compared with 2014, an increase of 2.2%. Total per head spending has now reached £17,687 in 2015, with “Housing” and “Transport” making the largest contributions of £4,282 and £2,465 respectively. The third-largest contribution to overall per head spending can be seen in “Miscellaneous” ,where spending in 2015 reached £2,257.

Comparing spending by types of goods and services (in current price terms), households have continued to spend most on “Services”. In 2015, spending on “Services” grew to its highest level since the start of the series, and is now at £9,961, contributing 56.9% of total household spending. “Services” include spending on essential items such as “Housing” and “Transport services”.

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7. Household final consumption expenditure revisions Quarter 4 (Oct to Dec) 2015

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) 2015, 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 3 (July to Sept) 2015) and the latest HHFCE estimates are summarised in Table 1 ‘Revisions to household final consumption expenditure’. They 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 1 decimal place. This may cause disparity between revisions displayed in the main consumer trends tables and the revisions table above.

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8. 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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9 .Background notes

  1. Release policy

    Household final consumption expenditure (HHFCE) estimates produced in consumer trends are produced according to the National Accounts timetable. The preliminary estimate of GDP for the first quarter of 2016 (Jan to Mar 2016) will be published on 27 April 2016, followed by the second estimate of GDP on 26 May 2016. The next full set of Quarterly National Accounts will be published on 30 June 2016.

  2. Basic quality information for consumer trends statistical bulletin

    Summary quality reports

    A Summary Quality Report for this Statistical Bulletin can be found on the National Statistics website.

  3. Main quality issues

    Household expenditure volume series are chain linked annually. Estimates in this consumer trends are now based on 2012 price structures i.e. the chained volume measure estimate in 2012 equals the current price value of expenditure in 2012.

    Growth in each year up to and including 2012 is calculated at average prices of the previous year. Growth from 2012 onwards is calculated at average prices of 2012. Volume series are only additive for the most recent periods, that is, annual data for 2012 onwards and quarterly data for quarter 1 (Jan to Mar) 2013 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.

  4. Coherence

    HHFCE 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.

  5. Further information

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

    Details of the policy governing the release of new data are available from our media relations office.

    Our compliance plan can be found on our website.

  6. Code of practice

    National Statistics are produced to high professional standards set out in the UK Statistics Authority's Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.

  7. Contact details

    For information about the content of this publication, contact Gareth Powell Tel: +44 (0)1633 45 5969 Email: consumer.trends@ons.gov.uk

  8. Other customer enquiries

    ONS Customer Contact Centre

    Tel: 0845 601 3034 International: +44 (0)845 601 3034 Minicom: +44 (0)1633 815044 Email: info@statistics.gsi.gov.uk Fax: +44 (0)1633 652747

    Post: Room D.265 Government Buildings, Cardiff Road, Newport, South Wales NP10 8XG www.ons.gov.uk

    Details of the policy governing the release of new data are available by visiting the U.K Statistics Authority or from the Media Relations Office.

    These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.

  9. Details of the policy governing the release of new data are available by visiting the UK Statistics Authority website or from the Media Relations Office email: media.relations@ons.gov.uk

    These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.

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10 . Methodology

Manylion cyswllt ar gyfer y Bwletin ystadegol

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