Household final consumption expenditure
Household final consumption expenditure (HHFCE) mainly represents traditional consumer spending. It also includes however, imputed rent for the provision of owner-occupied housing services, and consumption of own production.
For national accounting purposes, households are individuals or groups of people sharing living accommodation and, possibly, other aspects of daily life such as meals. The household sector thus includes not only those living in traditional households, but also those people living in institutions, such as retirement homes, boarding houses or prisons.
Households' consumption expenditure covers the purchase of all goods and services. It does not include the purchase of dwellings or expenditure on valuables (antiques and some jewellery), which are part of capital formation, nor does it include business expenditure.
Household consumption includes households’ income in kind, in lieu of cash including company cars for private purposes and free or subsidised accommodation or meals.
The accounts relate to consumption expenditure by UK resident households which can take place either in the UK or the rest of the world. Spending by non-residents in the UK is excluded. The UK consumption expenditure which takes place in the rest of the world is regarded as an import of services to the UK.
Correspondingly, consumption expenditure in the UK by households resident in the rest of the world is regarded as a UK export of services in the national accounts. Thus, total final consumption expenditure in the UK by all households has to have imports of services added and exports deducted in order to arrive at UK household final consumption expenditure for the national accounts.
Historically, UK household expenditure data have been compiled by this route, starting with the so-called 'domestic concept' and moving to the 'national concept'. From September 2001, following the move to direct data collection designed to match the Classification of Individual Consumption by Purpose (COICOP) it may prove more satisfactory to produce 'national concept' data directly for at least some types of expenditure and then derive the 'domestic concept' data from them if required.
Source: Office for National Statistics
Further information - including the classification of individual consumption and the categorisation of other components - can be found in Annex A of Consumer Trends.
Associated releases, publications and sources: Consumer Trends – summarises HHFCE with tables articles and appendices; RPI – used to deflate current price data to constant 1995=100 prices; Expenditure and Food Survey – provides about 30% of data used to compile HHFCE; Retail Sales Index – provides over 20% of data used to compile HHFCE.