Archive:Household consumption expenditure - national accounts

Data from September 2008, most recent data: Further Eurostat information, Main tables and Database.

Graph 1: Consumption expenditure of households on goods and services, EU-27, 2006 (1)(% of total household consumption expenditure)

The final consumption expenditure of households encompasses all domestic costs (by residents and non-residents) for individual needs. Among other things, it includes expenditure on goods and services, the consumption of garden produce and rent for owner-occupied dwellings.

This article explains the individual components of household consumption expenditure, which vary widely among Member States due to cultural, economic and several other factors affecting spending and saving habits.

Main statistical findings

Table 1: Total consumption expenditure of households (domestic concept)

Table 2: Mean consumption expenditure of households, 2005(PPS)

Table 3: Mean consumption expenditure of households by age of the head of household, 2005(PPS)

Graph 2: Mean consumption expenditure of households by income, EU-27, 2005 (1)(PPS)

Table 4: Mean consumption expenditure of households by employment status, 2005(PPS)

Graph 3: Mean consumption expenditure of households by type of household, EU, 2005 (1)(PPS)

Graph 4: Mean consumption expenditure of households by number of active persons, EU,(PPS)

Household consumption habits vary substantially among the European Union (EU) Member States. Factors such as culture, income, weather, household composition, economic structure and degree of urbanization can all influence habits in each country.

National accounts data also reveals that a little over one-fifth (21.9 %) of total household consumption expenditure in the EU in 2006 was devoted to housing, water, electricity, gas and other housing fuels. Expenditure on transport (13.6 %) and food and non-alcoholic beverages (12.7 %) together accounted for a little more than one-quarter of total households consumption expenditure, making these the next two most important categories in the EU.

Household Budget Survey

Both the Household budget survey (HBS) and national accounts provide a far more detailed breakdown of these aggregated consumption expenditure statistics.

The HBS shows that household expenditure devoted to each consumption categories varied greatly among Member States in 2005. The highest proportion of the mean consumption expenditure of households (in PPS) spent on housing, water, electricity, gas and other fuels in 2005 was recorded in Sweden (32.2 %), which was about three times as high as in Malta (9.1 %). The proportion of household consumption spent on food and non-alcoholic beverages was highest in Member States where household incomes were lowest; in Romania such items accounted for 44.2 % of the mean consumption expenditure of households, compared with a 9.3% average in Luxembourg.

Household consumption expenditure was also reflected in certain broad socio-demographic patterns. The mean consumption expenditure of households whose head was aged 30 to 59 years old tended to be much higher than the equivalent expenditure of households whose head was either aged under 30 or over 60. In several Member States that joined the EU since 2004, average household consumption expenditure of households headed by a person aged under 30 was generally much closer to the expenditure of households headed by someone of an older working age (30 to 59), and in Latvia and Romania was higher.

Households headed by self-employed or non-manual workers in industry and services in the Eu had, on average, the highest mean consumption expenditure of about PPS 32 500 in 2005, with that of households headed by manual workers about 25 % lower.

Income-expenditure link

As may be expected, there was a strong link between household income and expenditure across the EU; the 20 % of households with the highest incomes spent an average of about two and three-quarters times more than the poorest 20 % of households in 2005. There was also a strong correlation between average household consumption expenditure, the size of households and the number of active persons in the household. Household consumption expenditure was highest in households with three or more adults with dependent children and lowest within single person households; households with three or more active persons spent more than households with no active persons. Nevertheless, in both cases the relationship was not linear: economies of scale (for example, sharing a flat or a car, heating a room, etc.) may, at least to some degree, explain why the expenditure of a single person is generally considerably more than half the expenditure of a couple.

Data sources and availability

The Council regulation (EC) 2223/96 for the European system of accounts 1995 provides the underlying basis for the collection of data on household consumption expenditure with respect to data provided by Eurostat’s national accounts statistics. Note that the data from national accounts should include institutional households.

Context

The Household budget survey (HBS) describes the level and the structure of household expenditure in country. These surveys focus on consumption expenditure, and nationally are used to calculate weights for consumer price indices; they may also be used in compiling national accounts. HBS surveys sample surveys conducted in all of the Member States, as well as Croatia, the former Yugoslav Republic of Macedonia, Turkey, Norway and Switzerland, about every five to six years.

HBS results provide a picture of the total consumption expenditure of private households, analysed by a variety of socio-economic household characteristics such as the employment status, income and age of the main reference person, the number of active persons living in the household, household type and location (rural or urban), or the main source of income. Detailed Information is available ousing the Classification of individual consumption by purpose (COICOP), with over 230 headings for different goods and services (including aggregates).

HBS data are confined to the population residing in private households. The survey excludes collective or institutional households (such as hospitals, old persons’ homes, prisons, or military barracks), as well as persons without a fixed place of residence – in contrast to the data collected for national accounts. The basic unit for the collection of information is the household, defined as a social unit which shares household expenses or daily needs, in addition to having a common residence. Nevertheless, it is also important to identify the head of the household, as their personal characteristics are often used as the basis for classifying information on socio-economic characteristics. The head of the household is defined, for the purpose of the HBS, as the person who contributes the most to the income of the household (the main earner). To take economies of scale into account, household expenditures can be expressed per adult equivalent.

For the HBS, household consumption expenditure is defined as the value of goods and services used for directly meeting human needs. Household consumption covers expenditure on purchases of goods and services, own consumption, and the imputed rent of owner-occupied dwellings (the rent that the household would pay if it were a tenant). Household expenditure for goods and services is recorded at the price actually paid, which includes indirect taxes (VAT and excise duties) borne by the purchaser. Eurostat guidelines encourage non-monetary components of consumption to be included within the survey results, with internal production valued at retail prices, as if the product had been bought in a shop. Examples of internal production include own production of food (either by a farming household or by a family that has a different professional activity but grows their own food in a kitchen/vegetable garden or allotment), or withdrawals from stocks for own-use in the case of tradesmen or retailers. HBS data should also reflect benefits in kind provided by employers in exchange for work done. Notional rents are imputed to owner-occupiers and households accommodated free of charge.

Further Eurostat information

Publications

European system of accounts ESA 1995

Main tables

National accounts, see:

Annual national accounts

National Accounts detailed breakdowns (by industry, by product, by consumption purpose)

Final consumption expenditure of households by consumption purpose

Database

National accounts, see: