HOUSEHOLD FINAL CONSUMPTION
EXPENDITURE
January 30-February 1, 2013
Kingston, Jamaica
Overview
 Background
 Classification
 Estimation Procedure
- Commodity Flow
 Final consumption from private non profit
institutions serving households (NPISH)
Background
Household final consumption expenditure consists of
expenditure of resident households on the
consumption of goods and services.
Background
Household Final Consumption Expenditure (HFCE)
includes :
 goods and services bought for final
consumption by households
 goods produced for own final consumption by
households
 Housing services of owner-occupied dwellings
 Services produced by employing paid
domestic staff
Classification
HFCE is classified using the Classification of
Individual Consumption According to Purpose
(COICOP)
Estimation Method
Household Final consumption Expenditure (HFCE)
=
Total expenditure in domestic market
–
Direct purchases in domestic market
by non-resident households
+
Direct purchases abroad by resident
households
Estimation Method cont’d
Total expenditure in domestic market
 Total expenditure of goods
Imported
Commodity Flow - Imported consumer goods
Local Commodity Flow
- sales from local production obtained
from the production approach
 Total expenditures on services
Services
are estimated using data on local sales obtained from the
production approach
- Household Expenditure Survey is used as the benchmark estimate
- Other sources such as the Survey of Living Conditions are also
used in estimation and analysis of results
Estimation Method cont’d
Local Goods and Services
 Local goods and services are apportioned to
intermediate consumption and to the relevant final
consumption e.g. HFCE, GFCE, export etc.
 Taxes on products (incl. GCT) and margins are added
to the values allocated to HFCE to arrive at
consumption at purchasers’ price
Estimation Method cont’d
Imported Commodity Flow
For national accounts purposes, the Harmonized
Commodity Description and Coding System (HS) used
in the foreign trade statistics in respect of imports and
exports of merchandise is converted to the Standard
International Trade Classification (SITC), Rev. 4.
Estimation Method cont’d
Imported Commodity Flow
All imported goods (classified by SITC) are assigned
an end-use, based on whether they are used as
- consumer goods
- raw material or
- capital goods.
Account is taken of any item having more than one end
use.
Estimation Method cont’d
 This end use assignment is based on the United
Nation’s Classification by Broad Economic Categories
(BEC).
 The process of assigning end use classification
involved an inter-divisional working committee
including representatives from the Customs
Department.
Estimation Method cont’d
 One assumption of the commodity flow method is
that all goods are used up during the period in which
they are sold or imported.
 Adjustments therefore have to be made whenever
there are unusual occurrences such as hurricanes
where the use of increased imports might carry over
into the following period.
Estimation Method cont’d
Imported Commodity Flow
 The estimation process for HFCE takes account of only
those imported goods classified as consumer goods
from the end use classification
 Taxes on products and margins are added to the c.i.f.
value of imports to arrive at purchasers’ prices
Estimation Method cont’d
 Direct purchases abroad by residents
/Direct purchases in domestic market by non-residents
 Compiled based on the estimates from the Balance of
Payments
COICOP
2007 Percentage
Contribution
01
FOOD AND BEVERAGES
03
CLOTHING AND FOOTWEAR
04
HOUSING, WATER, ELECTRICITY, GAS, OTHER FUELS
05
06
FURNISHINGS, HOUSEHOLD EQUIPMENT AND
ROUTINE HOUSEHOLD MAINTENANCE
HEALTH
07
TRANSPORT
08
COMMUNICATION
09
RECREATION AND CULTURE
10
EDUCATION
11
RESTAURANTS AND HOTELS
15.7
12
MISCELLANEOUS GOODS AND SERVICES
13.2
Total HFCE
Expenditure in Domestic Market by Non-Residents
Expenditure Overseas by Residents
HFCE by Residents
29.6
3.0
11.7
6.9
4.3
15.6
3.4
10.0
2.2
115.7
18.6
2.9
100.0
Final consumption from private non profit
institutions serving households (NPISH)
Final consumption from NPISH is computed as gross
output less sales
NPISH is estimated using data obtained from the
production approach
Deflation
HFCE at constant prices
Deflated using CPI at the Class Level – 4 digit codes
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