4.1 Consumption

Consumption is described using two different concepts: First, there is the concept of final consumption expenditure, which refers to spending on the acquisition of consumer goods and services; and second, the concept of actual final consumption, which refers to the acquisition of consumer goods and services, regardless of who provides the funding. The concepts overlap in so far as total consumption expenditure at the level of the national economy equals total actual consumption, but the figures do differ in different sectors. The difference between the two concepts lies in how they deal with goods and services funded by general government or non-profit institutions serving households, but supplied to households as social transfers in kind.

Only general government, households and non-profit institutions have consumption expenditure; the goods and services purchased by business firms and financial institutions are used either as intermediate products, or they are counted as compensation of employees in kind.

The national accounts start out from consumption expenditure and two different ways of dividing consumption expenditure (the distinction between private and public consumption expenditure or between individual and collective consumption expenditure). This provides the basis for the calculation of actual consumption.