Household spending

Consumer Trends, Q2 2014

  • In Q2 2014, household spending (adjusted for inflation) grew by 0.6% (£1.5 billion).
  • The main contribution to growth can be seen in ‘Miscellaneous goods and services’ which has increased by 2.8% compared with Q1 2014. The largest negative contribution to growth can be seen in ‘Food and drink’ which has fallen by 0.9% compared with Q1 2014.
  • Household spending when compared with the same quarter a year ago has been rising each quarter since Q3 2011, it was 2.1% higher in Q2 2014, when compared with Q2 2013.
  • The current price value of household spending, which includes inflation, shows how much UK households spent. In Q2 2014 current price spending increased by 1.2% compared with Q1 2014, continuing the trend of positive quarterly growth since Q3 2009.
  • The household expenditure implied deflator grew by 0.6% in Q2 2014. Within household spending categories the ‘Miscellaneous goods and services’ implied deflator showed the largest increase in percentage terms, growing by 2.5% in Q2 2014.
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Consumer trends

Consumer Trends, Q3 2013: ONS

  • In Q3 2013, household spending (adjusted for inflation) grew by 0.8% (£1.9 billion). All areas showed positive growth with the exception of ‘Housing’ and ‘Health’.
  • Household spending when compared with the same quarter a year ago has risen in every quarter since Q1 2012 and was 2.5% higher in Q3 2013. This is the highest comparable growth since Q1 2008.
  • Household spending still remains 1.5% below the peak of spending (in volume terms) in Q4 2007.
  • The current price value of household spending, which includes inflation, shows how much UK households spent. In Q3 2013 current price spending increased by 1.7% compared with Q2 2013, continuing the trend of positive growth which has continued since Q3 2009. Current price spending is now 18.2% higher than Q4 2007.
  • In current price terms, the value of UK household spending per head was £4,117, an increase of 1.5% on the quarter.

Consumer trends

Consumer trends, Q2 2013: ONS

  • In Q2 2013, household spending (adjusted for inflation) grew by 0.3% (£661m). The main positive contributor to growth was increased household spending on ‘Transport’.
  • Household spending has increased by 0.3% but still remains 2.8% below the peak of spending (in volume terms) in Q4 2007. Households purchased 4.0% more in volume terms this quarter compared with the recent low of Q2 2009.
  • The current price value of household spending, which includes inflation, shows how much UK households spent. In Q2 2013 current price spending increased by 0.9% compared with Q1, continuing the trend of positive growth which has continued since Q3 2009. Current price spending is now 15.1% higher than Q4 2007. Households current price spending was 19.1% higher in Q2 2013 than the recent low of Q2 2009.
  • The value of UK household spending per head, in current price terms, was £4,037, an increase of 0.7% on the quarter and 10.3% when compared with Q1 2008, the quarter prior to the first fall in expenditure, including inflation, since 1997.

International comparisons: the economy

Measuring National Well-being: ONS

  • In international comparisons of household income the UK has dropped  from 5th place in 2005 to 12th place in 2011. This is partly as a result of the devaluation of sterling seen in this period.
  • Since 2009 inflation has remained high compared to the US, France and Germany but has been relatively less volatile
  • Despite falling 12 places between 2005 and 2011 when looking at rankings based on unemployment, the UK labour market has been more resilient in than previous recessions
  • In terms of household spending and wealth, the UK has remained relatively strong compared with other OECD countries
  • Despite falling two places in the rankings since 2005, the UK still fares relatively better under Net National Income than Gross Domestic Product

Frances Grady of the TUC said:

“The combination of recession and austerity has taken its toll on household finances, with income levels in the UK falling behind many of its European neighbours. ‘Even before the recession, household spending in the UK was far more reliant on debt than in other advanced economies. In order to address this as a country we need to obsess less about housing bubbles and focus instead on securing decent pay rises and creating better paid jobs.”

Sharp rise in UK household spending

Expenditure Index: Visa Europe

  • Sharp rise in UK household spending in September, with monthly growth of 3.0% recorded, the best figure since May 2009 (August: +1.2%).
  • Return to growth on annual measure, consumer spending up 0.2% on the year in September (August: -1.0%). First year-on-year rise since July 2011.
  • Strong rebound in spending over Q3 as a whole: September 3m/3m rate 1.9% (August: -0.1%)
  • High street principal source of growth as “face-to-face” spending rises by 1.6% year-on-year

Consumer Trends

Consumer Trends, Q2 2012: ONS

  • In Q2 2012, the volume measure of household spending (adjusted for inflation) fell by 0.2 per cent (£527 million), the first contraction since Q3 2011. It was 5.5 per cent below the peak of Q4 2007, and 1.2 per cent higher than Q2 2009
  • In Q2 2012 the value of current price household spending (inflation included)  increased by 0.7 per cent on the quarter, meaning it was 9.5 per cent higher than Q4 2007
  • In Q2 2012, the value of UK household spending per head was £3,813. This was £214 higher than in Q4 2007, the peak of pre recession spending

CBI: growth forecast

CBI: growth forecast

  • CBI expects GDP growth in 2012 will be 0.6%, slightly down from its forecast in February of 0.9%.
  • CBI forecasts GDP growth to be 2.0% in 2013.
  • Quarter-on-quarter growth is expected to be flat in the second quarter of 2012 (0%) with improvement in the second half of the year (0.7%, 0.5%)
  • Household spending will remain subdued, with weak wage growth and unemployment rising to a peak of 2.86 million in the first quarter of 2013
  • Modest rise in business investment, growing at around 4% in 2012 and 5% next year.
  • Exports are forecast to see a small rise this year (1.5%) and expected to increase by around 6% in 2013