We produce small area income and consumers expenditure estimates for 45 categories of spending, and project these forward for ten years ahead. The national level controls on income and spending are derived from the National Accounts data series. We also use the annual Family Spending survey to disaggregate some of the standard ‘COICOP’ spending categories into finer detail, and to aggregate some others.
Data on spending and income for selected subgroups of the population by lifestage, family structure, social grade, employment status is used to construct spending by income decile in each small area.
The forecasts of national change in consumer spending and prices are consistent with a broad average of a range of official and independent medium term economic forecasts. The national change in individual spending items, take into account past growth rates, past fluctuations of growth within the economic cycle – durables fluctuate more than convenience and ‘essentials’ – and taking into account anticipated trends in prices under global market changes.
Small area forecasts for small areas differential growth rate depend on the level of income. In the past there has been increasing polarisation – with higher income areas gradually growing more prosperous than lower income areas. The method draws on various academic analyses of trends in income polarisation in small areas.