What is Household Consumer Expenditure?

Household Consumer Expenditure

What is Household Consumer Expenditure?
What is Household Consumer Expenditure?
The Household Consumer Expenditure consists of spending incurred by households on the consumption of goods and services. The Consumer Expenditure Survey, conducted every 5 years by the National Sample Survey Office, is designed to record information on the spending pattern of a resident in an Indian household.
The household sector covers not only those living in traditional households but also those people living in communal establishments, such as retirement homes, boarding houses, and prisons.
It is measured at consumers' prices which is the price the consumer actually pays at the time of the purchase. It includes non-deductible value-added tax and other taxes on products, transport, and marketing costs.

The data reveals the average expenditure on goods (food and non-food) and services and helps generate estimates of household Monthly Per Capita Consumer Expenditure (MPCE).

Here are a few components used to measure Household Consumer Expenditure:

1. Household spending on essential goods and services, such as food, clothing, rent etc.
2. Household spending on products provided by the government, e.g. tickets to public museums, zoos.
3. Household spending for licenses and permits, e.g. fees for issuing passports
4. Household's consumption of outputs produced by them, e.g. consumption of milk and vegetables produced on a farm
5. Income in kind earned by employees, e.g. free train tickets for railway employees

Need for Household Consumer Expenditure

1. The estimates of consumption spending show the demand dynamics of the economy, living standards, and growth trends.
2. Helps policymakers address possible structural anomalies in a specific socio-economic population.
3. It provides a forecasting tool to producers of goods and services.
4. Helps the government to establish a new base level for the GDP and other macro-economic indicators.

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