The Office for National Statistics (ONS) has updated the contents of its inflation basket, used to calculate price inflation for goods and services in the UK.
The inflation basket is used each month to calculate changes to an official measure of price inflation, the Consumer Prices Index (CPI).
Removed from the ONS inflation basket as part of their latest update are DVD recorders and compact digital cameras.
These two items were replaced in the inflation basket with online video streaming services, such as Netflix, and digital single lens reflex (DSLR) cameras respectively.
The inflation basket currently contains 699 different goods and services, designed to reflect typical household expenditure and therefore provide a reasonable estimate of changes to our experiences of price inflation.
Nine items were removed from the inflation basket as part of this latest update by the ONS; wallpaper paste, hardwood flooring, gardeners’ fees, DVD recorders, takeaway coffee and charges for after-school clubs.
These are apparently goods and services which are no longer representative of modern spending habits, or in some cases represented by other items in the inflation basket.
A total of 14 additions were made to the inflation basket; flavoured milk, fresh fruit snacking pots, honey, mixer drinks, men’s clothing hire, canvas shoes, manual as well as automatic car washes, interchangeable-lens digital cameras, plant food, wild bird seed, fashion necklaces and DVD rental/video-on-demand subscription services.
Price inflation is an average measure and is often not representative of individual experiences of inflation.
We often find, for example, that our retired clients have a much higher inflation experience than the working age population, due to the nature of the goods and services contained within their inflation baskets, which typically rise in price much faster than average.
The latest figures show the Consumer Prices Index (CPI) measure of price inflation fell to 1.9% for the year to January 2014, slightly below the government target of 2%.
It’s important to consider the contents of your own inflation basket, how these might rise in price in the future and what steps you can put in place to ensure your income is not eroded in real terms.
What’s in your inflation basket?
