Consumption expenditure by households
Consumption expenditure by households is the spending by households on goods and services to
satisfy their needs and wants and includes anything from spending on refrigerators to medical
services to movie tickets to food
The total expenditure of all households in the economy on consumer goods and services is called
total or aggregate consumption expenditure, or simply total consumption. It is usually represented
by the symbol C.
In the national accounts of South Africa, final consumption expenditure by households is classified in
terms of durable goods, semi-durable goods, nondurable goods and service.
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Durable goods are tangible goods that tend to last for more than a year. Tangible goods are
things that can be touched, i.e. physical goods. Examples of durable goods are furniture,
household appliances, cars and personal computers. These goods are all things that we use
over and over for several years and that we do not dispose of very quickly.
Semi-durable goods are tangible goods with a shorter life cycle than durable goods. They
are also not as expensive as durable goods.
Examples of semi-durable goods are clothing and footwear, motor vehicle tyres, parts and
accessories, and glassware.
Non-durable goods are tangible goods that are used once only. Common examples are food
and petrol.
Services include consumption expenditure on activities that provide direct satisfaction of
needs and wants, without the production of tangible goods. Common examples are rent,
medical services, information, entertainment and education.
Consumption expenditure by households is the largest component of expenditure in South Africa
and include both spending on domestic goods and foreign goods. It is usually between 60% to 63%
of total expenditure in the economy.
Since household consumption expenditure is such a large component of total expenditure in the
economy a change in the spending behaviour, even a small one, will result in a change in the
demand for goods, output and income. It is therefore worth studying in more detail.