Household consumption by purpose

Data extracted in November 2018.

Planned article update: November 2019.

Highlights

In 2017, EU total household expenditure amounted to 54.4 % of GDP.

In 2017, almost a quarter of EU household expenditure (24.2 % of total or 13.1 % of GDP) was devoted to 'Housing, water, electricity, gas and other fuels'.

Household expenditure by consumption purpose - COICOP, EU-28, 2017, share of total
Source: Eurostat (nama_10_co3_p3)

This article analyses trends in the structure of household final consumption expenditure by consumption purpose (COICOP) which can be expected to have a significant influence on citizen's wellbeing.

Full article

Analysis of EU aggregates

Trends of EU-28 household expenditure 2008-2017

In 2017, EU-28 total household expenditure amounted to 54.4 % of GDP. This was a slight decrease compared with 2016, when it amounted to 54.5 % of GDP. Except for 2008-9, an overall downward trend has been observed since 2000, where household expenditure peaked at 57.0% of GDP.

Composition of EU-28 household expenditure in 2017

Looking at the composition of EU-28 household expenditure by consumption purpose by the main 10 COICOP categories based on current price figures (see Tables 1, 2 and Figure 1), almost a quarter of EU-28 household expenditure (24.2 % of total or 13.1 % of GDP) was devoted to 'Housing, water, electricity, gas and other fuels'. Other large shares are observed for 'Transport' (13.0 % of total or 7.1 % of GDP), 'Food and non-alcoholic beverages' (12.2 % of total or 6.7 % of GDP) and 'Miscellaneous goods and services' (11.4 % of total or 6.2 % of GDP). 'Housing, water, electricity, gas and other fuels', 'Transport' and 'Food and non-alcoholic beverages' account for almost half of the total household expenditure (49.4 %).

Table 1: Evolution of household expenditure by consumption purpose - COICOP, EU-28, 2008-2017, cumulated % of GDP
Source: Eurostat (nama_10_co3_p3)

Table 2: Evolution of household expenditure by consumption purpose - COICOP, EU-28, 2008-2017, share of total
Source: Eurostat (nama_10_co3_p3)

Figure 1: Household expenditure by consumption purpose - COICOP, EU-28, 2017, share of total
Source: Eurostat (nama_10_co3_p3)

'Restaurants and hotels' (8.8% of total or 4.8% of GDP) and 'Recreation and culture' (8.5 % of total or 4.6 % of GDP each) followed. The remaining household spending was distributed over 'Furnishings, household equipment and routine household maintenance' (5.5 % of total or 3.0 % of GDP), 'Clothing and footwear' (4.9 % of total or 2.7 % of GDP), 'Health' (4.0 % of total or 2.2 % of GDP), 'Alcoholic beverages, tobacco and narcotics' (3.8 % of total or 2.1 % of GDP), 'Communications' (2.5% of total or 1.4 % of GDP) and 'Education' (1.1 % of total or 0.6 % of GDP) – which together represented 21.8 % of total expenditure or 12.0 % of EU-28 GDP in 2017.

Evolution of shares over time

While the overall share of GDP fluctuated between a highest level of 56.0 % in 2009 and a lowest level of 54.4 % of GDP in 2017 over the last ten years, the composition of household expenditure changed gradually over time.

Most notably, the biggest increase in the share of total expenditure and share of GDP over 2008-2017 is noted for 'Housing, water, electricity, gas and other fuels' (by 0.9 p.p. in the share of total expenditure and 0.2 p.p. in GDP), 'Restaurants and hotels' (by 0.6 p.p. in the share of total expenditure and 0.3 p.p. in GDP) and 'Health' (by 0.5 p.p. in the share of total expenditure and 0.3 p.p. in GDP) while the biggest decrease is noted for 'Miscellaneous goods and services' (by 0.7 p.p. in the share of total expenditure and 0.5 p.p. in GDP), 'Recreation and culture' (by 0.5 p.p. in the share of total expenditure and 0.4 p.p. in GDP) and 'Transport' (by 0.3 p.p. in the share of total expenditure and 0.2 p.p. in GDP).

Evolution of volumes

The analysis of household consumption in terms of volumes allows also some interesting insights: the development of volumes (of total) during the period 2008-2017 shows an increase (of 7.8%), although year 2009 (the crisis year) and years of 2012 and 2013 show a slight decrease. The largest increases were recorded in 'Communications' (of 29.8%), 'Health' (22.7%) and 'Clothing and footwear' (11.3%). Reductions were posted in 'Alcoholic beverages, tobacco and narcotics' (-10.5%).

Figure 2: Evolution of chain linked volumes, index 2008=100 of household expenditure by consumption purpose - COICOP, EU-28, 2008-2017
Source: Eurostat (nama_10_co3_p3)

The detailed table corresponding to figure 2 is available here.

Evolution of implicit deflator

Finally, some trends in the implicit deflator ^[1]seem worth mentioning: the development of implicit prices (of total) during the period 2008-2017 shows a steady increase (of 7.2%), except for 2009 (the crisis year) and 2016. The largest increases were recorded in 'Education' (of 29.1%), 'Alcoholic beverages, tobacco and narcotics' (of 27.2%), 'Restaurants and hotels' (of 15.6%) and 'Housing, water, electricity, gas and other fuels' (of 12.1%); reductions were posted in 'Communications' (of -19.5%), 'Recreation and culture' (of -1.6%), 'Miscellaneous goods and services' (of -1.0%) and 'Clothing and footwear' (of -0.9%).

Figure 3: Evolution of implicit deflator, index 2008=100 of household expenditure by consumption purpose - COICOP, EU-28, 2008-2017
Source: Eurostat (nama_10_co3_p3)

The detailed table corresponding to figure 3 is available here.

Country specific trends

Household expenditure shares highest in Cyprus and Greece

Looking at particular countries, the analysis in this article can only point out some interesting trends: as a ratio to GDP in 2017, the highest levels of household expenditure were found in Cyprus (76.4% of GDP), Greece (73.0%) and Portugal (68.3%), while the lowest levels were found in Ireland (30.9%), Luxembourg (34.3%), Sweden (43.3%) and The Netherlands (43.6%).

Table 3: Household expenditure by consumption purpose - COICOP, Member States, 2017, cumulated % of GDP
Source: Eurostat (nama_10_co3_p3)

Table 4: Household expenditure by consumption purpose - COICOP, Member States, 2017, share of total
Source: Eurostat (nama_10_co3_p3)

In the EU as a whole, as well as in nearly all EU countries (except Romania, Estonia, Cyprus, Lithuania and Malta) 'Housing, water, electricity, gas and other fuels' was the most important function of household expenditure, followed by 'Transport' and 'Food and non-alcoholic beverages'.

As regards expenditure 'Housing, water, electricity, gas and other fuels', the highest levels of household expenditure were found in Finland (28.8%), Denmark (28.7%) and United Kingdom (26.7%), while the lowest levels were observed in Malta (10.1%), Lithuania (14.8%) and Cyprus (15.4%).

Figure 4: Housing, water, electricity, gas and other fuels, Member States, 2017, % of total expenditure
Source: Eurostat (nama_10_co3_p3)

For expenditure on 'Food and non-alcoholic beverages', the highest shares were found in Romania (27.8%), Lithuania (21.6%), Estonia (20.3%) and Bulgaria (19.2%), while the lowest shares were observed in United Kingdom (8.2%), Luxembourg (8.9%), Ireland (9.2% ) and Austria (9.9%).

Figure 5: Food and non-alcoholic beverages, Member States, 2017, % of total expenditure
Source: Eurostat (nama_10_co3_p3)

Concerning expenditure on 'Transport', the highest shares of household expenditure were found in Slovenia (16.3%), Lithuania (15.1%) and Germany (14.7%), while the lowest levels were found in Slovakia (7.9%), Czechia (10.1%) and Belgium (11.1%).

Figure 6: Transport, Member States, 2017, % of total expenditure
Source: Eurostat (nama_10_co3_p3)

Data sources

Eurostat collects data on household final consumption expenditure according to the international Classification of individual consumption by purpose (COICOP) in the framework of ESA2010.

The transmission requirements for each dataset are defined in ESA 2010 transmission programme. For COICOP data these are t+9 months. Therefore, in this article the latest data available refer to the year 2017.

Breakdowns

Household consumption expenditure is classified by consumption purpose according to the COICOP classification (Classification Of Individual COnsumption by Purpose, see also Commission Regulation 113/2002 of 23 January 2002). COICOP categories at three-digit level are as follows:

P010 - Food and non-alcoholic beverages

P011 - Food

P012 - Non-alcoholic beverages

P020 - Alcoholic beverages, tobacco and narcotics

P021 - Alcoholic beverages

P022 - Tobacco

P023 - Narcotics

P030 - Clothing and footwear

P031 - Clothing

P032 - Footwear

P040 - Housing, water, electricity, gas and other fuels

P041 - Actual rentals for housing

P042 - Imputed rentals for housing

P043 - Maintenance and repair of the dwelling

P044 - Water supply and miscellaneous services relating to the dwelling

P045 - Electricity, gas and other fuels

P050 - Furnishings, household equipment and routine household maintenance

P051 - Furniture and furnishings, carpets and other floor coverings

P052 - Household textiles

P053 - Household appliances

P054 - Glassware, tableware and household utensils

P055 - Tools and equipment for house and garden

P056 - Goods and services for routine household maintenance

P060 - Health

P061 - Medical products, appliances and equipment

P062 - Outpatient services

P063 - Hospital services

P070 - Transport

P071 - Purchase of vehicles

P072 - Operation of personal transport equipment

P073 - Transport services

P080 - Communication

P081 - Postal services

P082 - Telephone and telefax equipment

P083 - Telephone and telefax services

P090 - Recreation and culture

P091 - Audio-visual, photographic and information processing equipment

P092 - Other major durables for recreation and culture

P093 - Other recreational items and equipment, gardens and pets

P094 - Recreational and cultural services

P095 - Newspapers, books and stationery

P096 - Package holidays

P100 - Education

P101 - Pre-primary and primary education

P102 - Secondary education

P103 - Post-secondary non-tertiary education

P104 - Tertiary education

P105 - Education not definable by level

P110 - Restaurants and hotels

P111 - Catering services

P112 - Accommodation services

P120 - Miscellaneous goods and services

P121 - Personal care

P122 - Prostitution

P123 - Personal effects n.e.c.

P124 - Social protection

P125 - Insurance

P126 - Financial services n.e.c.

P127 - Other services n.e.c.

Derogations

Breakdowns of CP100 Education and CP80 Communication are not published as several countries have derogations from the data transmission requirements of ESA 2010. For CP100: Denmark, Germany, Ireland, Spain, France and Slovakia. For CP80: Ireland.

Context

Consumption expenditure is what people, acting either individually or collectively, spend on goods and services to satisfy their needs and wants. A household’s economic well-being can be expressed in terms of its access to goods and services. The more that can be consumed, the higher the level of economic well-being, though the relationship between the two is not a linear one. Measuring consumption expenditure might, therefore, be a way of measuring economic well-being.

Studies of consumption investigate how and why society and individuals consume goods and services, and how this affects society and human relationships. Contemporary studies focus on meanings of goods and the role of consumption in identity making. Traditionally, consumption was seen as rather unimportant compared to production, and the political and economic issues surrounding it. However, with the development of a consumer society, increasing consumer power in the market place, the growth in marketing, advertising, sophisticated consumers, ethical consumption etc., it is recognised as central to modern life.

In national accounts, the final consumption expenditure of households is the biggest component of the expenditure approach to GDP. Its evolution allows an assessment of purchases made by households, reflecting changes in wages and other incomes, but also in employment and in savings behaviour.

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Notes

↑ Implicit deflator series are derived as a ratio of current price to chain-linked volumes series and give indication of underlying price changes.

[1] Implicit deflator series are derived as a ratio of current price to chain-linked volumes series and give indication of underlying price changes.

[1]