The UK Basket of goods and services, which tracks the 720 most bought household items, and is used to calculate CPI inflation has been recently changed to reflect the changing tastes and fashions of UK consumers. In 2021, a total of 17 items have been added with 10 items leaving the total basket.
High demand during the pandemic has introduced hand-sanitiser into the basket of goods. Since the start of the pandemic, consumers have become wearier of their hygiene to reduce the risk of contracting COVID-19. Hence, the basket of good has been updated to include hand-sanitiser to include these changing consumers tastes and fashions.
Home gym equipment such as hand weights as well as men’s joggers and smartwatches have been introduced into the basket. Due to the lockdown, gyms and other leisure areas have been closed temporarily. Hence consumers have begun purchasing home exercise equipment such as smartwatches that track heartbeats, to stay fit or to get into shape during the pandemic. This may contribute to the sale of men’s joggers, however, the likely reason for the increase in the sales of joggers is because, although it may not look professional, it is comfier. In a situation where everyone is attending their meetings through zoom calls from home, most workers have taken the liberty to maximise comfort.
Hybrid electric cars were also introduced into the basket of goods as we near the 2030 deadline, where the sale of new petrol and diesel cars will be banned. The addition of hybrid electric cars may also reflect changing tastes and fashions as the number of climate weary consumers, or tech-savvy young people who just want a tesla because it looks cool has likely increased.
At the same time, white chocolate bars, ground coffee, and lamb shoulder on the bone have left the basket of goods. The decrease in demand for white chocolate demand is a perfect example of consumer tastes changing as milk chocolate such as Maltesers has become more popular with consumers. Due to the closing of public areas, as well as institutions such as schools and offices going online, canteen sandwiches have also lost their spot in the basket of goods. Additionally, ground coffee has been replaced with coffee sachets. Lamb has also lost its appeal, likely because its a luxury meat and consumer confidence and incomes are low. Fewer consumers can afford it, and if they can, they would rather likely save that money until there is more certainty in the future.
However, some argue that the basket of goods is not a good way of calculating inflation. Items such as electric cars, hand-weights and smartwatches are one time-purchases, compared to essential items such as food and petrol. This means the basket of goods may not accurately represent the actual rate of inflation. The most recent CPI measurement for inflation is 0.7%, meanwhile, the RPI measurement is almost double that at 1.4%. This is because the RPI takes into account mortgage interest repayments, as well as many other factors such as council tax, however, it is not internationally comparable, hence CPI is the more popular figure.