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Statistical bulletin: Consumer Trends, Quarter 3 (July to Sept) 2015 This product is designated as National Statistics

Released: 23 December 2015 Download PDF

Main points

  • In Quarter 3 (July to Sept) 2015, household spending (adjusted for inflation) grew by 0.9% (£2.5 billion).
  • The main contribution to growth can be seen in “Transport”, which includes “Purchase of motor cars”. Transport has increased by 1.7% compared with Quarter 2 (Apr to June) 2015. “Alcoholic beverages, tobacco and narcotics” and “Restaurants and hotels” are the only areas showing small negative contributions to the overall growth in the current quarter (July to Sept) 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 £278.2 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 3.0% higher in Quarter 3 (July to Sept) 2015, when compared with Quarter 3 (July to Sept) 2014.
  • The current price value of household spending, which includes inflation, shows how much UK households spent. In Quarter 3 (July to Sept) 2015, current price spending increased by 1.0% compared with Quarter 2 (Apr to June) 2015.
  • The household expenditure implied deflator increased by 0.1% in Quarter 3 (July to Sept) 2015 compared with the previous quarter (Apr to June) 2015.

Summary of household expenditure in Quarter 3 (July to Sept) 2015

The volume measure provides an estimate of the amount of goods and services purchased by households. In Quarter 3 (July to Sept) 2015, it increased by 0.9%. The current price value of household spending (inflation included) shows how much UK households spent. In Quarter 3 (July to Sept) 2015, it increased by 1.0% compared with Quarter 2 (Apr to June) 2015. Figure 1 compares the levels of current price and volume spending from 2008 onwards.

Figure 1: Quarterly household final consumption expenditure total (£ billion), seasonally adjusted

UK, Quarter 1 (Jan to Mar) 2009 to Quarter 3 (July to Sept) 2015

Figure 1: Quarterly household final consumption expenditure total (£ billion), seasonally adjusted
Source: Office for National Statistics

Notes:

  1. In this chart Q1 refers to Quarter 1 (Jan to Mar), Q2 refers to Quarter 2 (Apr to June), Q3 refers to Quarter 3 (July to Sept) and Q4 refers to Quarter 4 (Oct to Dec)

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Household spending by product

Figure 3 shows spending in volume terms (adjusted for inflation). Spending on “Transport” has made the largest contribution to the positive growth in Quarter 3 (July to Sept) 2015, increasing by 1.7% on the quarter. Within “Transport”, “Purchase of motor cars” showed the largest increase of 3.5% compared with Quarter 2 (Apr to June) 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”, which has fallen by 1.2% compared with the previous quarter (Apr to June) 2015 and “Tobacco”, which has fallen by 0.5% in volume terms compared with the previous quarter (Apr to June) 2015.

Figure 3: Classification of Individual Consumption by Purpose (COICOP) contribution to overall growth, domestic measure, chained volume measure, seasonally adjusted

UK, Quarter 3 (July to Sept) 2015

Figure 3: Classification of Individual Consumption by Purpose (COICOP) contribution to overall growth, domestic measure, chained volume measure, seasonally adjusted
Source: Office for National Statistics

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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 (July to Sept) 2015, the seasonally adjusted household expenditure measure of prices, the implied deflator, increased by 0.1%, indicating the small 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 0.2% lower than in Quarter 3 (July to Sept) 2014. Again, this is broadly in line with recent CPI data.

Figure 4: Household expenditure implied deflator, seasonally adjusted, percentage change

UK, Quarter 1 (Jan to Mar) 2009 to Quarter 3 (July to Sept) 2015

Figure 4: Household expenditure implied deflator, seasonally adjusted, percentage change
Source: Office for National Statistics

Notes:

  1. In this chart Q1 refers to Quarter 1 (Jan to Mar), Q2 refers to Quarter 2 (Apr to June), Q3 refers to Quarter 3 (July to Sept) and Q4 refers to Quarter 4 (Oct to Dec)

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From 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 the same quarter a year ago, with those of the CPI from 2008 onwards.

Figure 5: Household expenditure implied deflator versus CPI, not seasonally adjusted, quarter-on-quarter-a-year ago, percentage change

UK, Quarter 1 (Jan to Mar) 2009 to Quarter 3 (Jul to Sept) 2015

Figure 5: Household expenditure implied deflator versus CPI, not seasonally adjusted, quarter-on-quarter-a-year ago, percentage change
Source: Office for National Statistics

Notes:

  1. In this chart Q1 refers to Quarter 1 (Jan to Mar), Q2 refers to Quarter 2 (Apr to June), Q3 refers to Quarter 3 (July to Sept) and Q4 refers to Quarter 4 (Oct to Dec)

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Household final consumption expenditure revisions, Quarter 3 (July to Sept) 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 3 (July to Sept) 2015, the revisions to total household final consumption expenditure have been made from Quarter 1 (Jan to Mar) 2014.

Revisions between the previous edition of Consumer Trends Quarter 2 (Apr to June) 2015 and the latest HHFCE estimates are summarised in Table 1 “ Revisions to Household Final Consumption Expenditure (1.27 Mb Excel sheet) ”.   They reflect updated data from suppliers, including the take on of new financial inquiry data, as well as adjustments to HHFCE as a result of the GDP balancing process.

Table 1: Household Final Consumption Expenditure Revisions, Quarter 3 (July to Sept) 2015

UK

  £ million % %
Revisions to value (current prices) Revisions to growth (current prices) Revisions to growth (volume measure)
2014 -504 _ -0.1
2014 Q1 -472 -0.2 -0.1
2014 Q2 333 0.3 0.1
2014 Q3 252 _ -0.2
2014 Q4 -617 -0.3 -0.1
2015 Q1 -1,246 -0.2 -0.1
2015 Q2 -1,448 -0.1 _

Table source: Office for National Statistics

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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 above.

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, that is, 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.

Table source: Office for National Statistics

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Background notes

  1. Next edition

    The next edition of Consumer Trends, Quarter 4 (Oct to Dec) 2015, will be published on 31 March 2016. Estimates will be consistent with Blue Book 2015.

  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 fourth quarter of 2015 (Oct to Dec) 2015 will be published on 28 January 2016, followed by the second estimate of GDP on 25 February 2016. The next full set of Quarterly National Accounts will be published on 31 March 2016.

  3. Basic quality information for consumer trends statistical bulletin

    Summary quality reports

    A Summary quality report for this statistical bulletin can be found on our website. 

  4. Main quality issues

    Household expenditure volume series are chain linked annually. Estimates in this consumer trends are now based on 2012 price structures, that is, 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.

  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.

    Due to differences in low level rounding, National chained volume measure data presented in these tables will vary from those presented in the Quarterly National Accounts bulletin.

  6. 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.

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  8. 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.

  9. Contact Details:

    For information about the content of this publication, contact David Matthewson

    Tel: +44 (0)1633 45 5612

    Email: consumer.trends@ons.gsi.gov.uk

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

Statistical contacts

Name Phone Department Email
David Matthewson +44 (0)1633 455612 Household Accounts Delivery consumer.trends@ons.gsi.gov.uk
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