Inflation basket of goods highlights seven decades of changing UK lifestyles

http://www.theguardian.com/business/2015/mar/15/inflation-basket-of-goods-changing-uk-lifestyles

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What’s in, what’s out? It’s time for the annual reshuffle of the shopping basket used to measure inflation in the UK, almost 70 years since it was first compiled.

The updated contents of the virtual shopping basket will be revealed by the Office for National Statistics on Tuesday. Looking back over the past eight decades, they paint a fascinating picture of changing lifestyles in Britain.

In the late 1940s, men’s and women’s hats, gramophone records, cod liver oil, iron bedsteads and gas fires featured in the basket. By 2014, it included video streaming services such as Netflix, condoms, baby wipes and flavoured milk bought on the go.

In 1947, the Ministry of Labour and National Service began recording the prices of a “typical” shopping basket to help calculate inflation. As the prices of the various items in the basket change over time, so does the total cost of the basket. Each year, the basket is updated and new products and services are added while others are removed. Responsibility for the inflation figures later moved to what is now known as the Office for National Statistics.

The march of technology saw ebooks included for the first time in 2013 along with digital television receivers. Last year, DVD recorders were dropped (seen as old technology) – along with hardwood flooring (a victim of austerity).

As well as updating the contents of the basket, the ONS also reviews the weighting attached to each item that makes up the consumer price index (CPI), to better reflect the changing nature of the cost of living. Last year, it noted that household fuels now account for a much larger proportion of people’s living costs than a decade ago.

Over the last 25 years households started spending far more on services like hairdressers than in the early days of the basket.

The basket has got ever larger over the years and now includes restaurant meals, package holidays and insurance policies. Some food staples – like bread, milk and tea – have stayed while others drift in and out. Canned corned beef was in the first basket and was only removed in 2005 (charcuterie was added two years ago).

In 1947, the food section contained 65 items. It soon expanded to include various cuts of fresh meat in 1956 such sirloin, silverside, brisket and popeseye steak, as the postwar economy recovered.

By 2014, the food list had swelled to more than 150 items, including kiwis, avocados, pre-packed salad, energy and mixer drinks, fruit smoothies and fish fingers. The large variety of fresh beef cuts has made way for frozen beefburgers and chicken nuggets. Five years ago, garlic bread ousted pitta bread, and three years ago, rum replaced champagne.

Some foods have made a comeback. Frozen prawns dropped out in 1992, only to return 10 years later, while honey left in 1991 and made a comeback last year. Sparkling wine was removed in 2006 and returned in 2011 to reflect the growth of non-champagne sales.

Falling food prices and the global oil slump – which is feeding through to petrol and other fuel prices – have been pushing inflation lower and it hit 0.3% in January, the lowest level since consumer price records began in 1989. Inflation is even expected to turn negative this spring before picking up again.

The key measure in 1947 and for decades to come was the retail prices index (RPI). It has been replaced by the CPI, which is now used by the Bank of England for inflation targeting. The main difference between the two measures is that RPI includes housing costs whereas CPI does not. Pensions and most benefits are now linked to CPI, but some costs such as rail fares are still linked to RPI.