The Private Final Consumption Expenditure (PFCE) is defined as the expenditure incurred on the final consumption of goods and services by the resident households and non-profit institutions serving households.
It includes all the purchases made by the consumers, such as food, housing (rents), energy, clothing, health, leisure, education, communication, transport, as well as hotel and restaurant services.
The final consumption expenditure of households relates to the outlays on new durable as well as non-durable goods (except land) and on services.
It also includes all the domestic and international expenditures incurred by citizens of a country. This means, if a resident of India consumes anything, even on foreign land, it will be added up to this component of expenditure, whereas consumption by a foreigner on Indian land will be subtracted from this component of expenditure.
It is one of the most important components in the method of calculating national income via expenditure method.
What is Governent Final consumption Expenditure (GFCE)? Click here
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