By Will Sturgeon, 20 March 2006 15:50
NEWS
The "shopping basket" of goods, used as a common standard for measuring inflation in the UK, has been updated yet again to more closely reflect consumer buying trends.
So out go the slippers, chocolate biscuits and CD players and in come MP3 players and music downloads.
The basket, compiled by the Office for National Statistics (ONS), is intended to be a measure of the fluctuations in the prices paid for items by the average man and woman in the street. In the past, items such as Mars bars and a litre of gin have been staples of the list but in recent years items such as laptops and consumer electronics have been added.
However, critics have suggested that the addition of items which tend to fall in value, irrespective of inflation, such as gadgets, could skew the overall result of such a metric.
A spokesman for the ONS told silicon.com that negative inflation is still relevant as an indication of general cost of living not necessarily tied to inflation.
He said: "People can generally pay less now for an iPod than they did six months ago. Such items belong in the basket just as much as those things which do not experience such price patterns," he added, speaking of items such as the Mars bar and bottle of gin which typically increase rather than decrease in price over time.
The spokesman added: "The basket is intended to be as close a reflection as possible of people's spending habits."
Each month the ONS collects around 120,000 prices for its list of around 650 goods and services.
Comments
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1. anonymous
Well I have yet to meet anyone who buys a new MP3 player every few weeks or months, whereas mars bars, biscuits and gin etc. are (to some at least) regular purchases that can indeed be described as a staple.
The reality here is that the Government is deliberately packing the inflation shopping basket with cheap imports and other goods that have a tendency to fall in value so that inflation "remains" low.
Every week another headline shouts about yet another inflation-busting rise in council tax, train fares, insurance premiums, [insert your most hated price-rise here] - but when was the last time you noticed a price increase that was both below the rate of inflation and was not for an imported good or service?
Distorting the inflation figures may be politically expedient in the short term but it will come back to bite us, and meanwhile we are doing great harm to the long term competitiveness of the British economy.
2. anonymous
The claims from ONS are spurious at best. They are clearly filling the basket with items which will halve in price because that will create a healthier image of the UK effect of inflation. Mars bars may rise by a couple of pence each year. Your bottle of Gin might go up by a few quid every couple of years. My iPod cost £299; now £199. My £899 laptop is now £499; this is just more smoke and mirrors.
3. Donald Clarkson
How utterly ridiculous. Not only is an MP3 player not an essential consumable, but its price is governed by the exploitation potential of some or other developing country. When the UK provides the world's cheap labour (can't be long now) then the price of such toys may become relevant, but of course then the price of gin will be even more important.
4. Mark Hosey
Yeah, Lies, damned lies and statistics.
If they were honest and honourable they would run 2 inices. One for the necesities of life (roof, food and heat) which Is going up and one for luxuries.
Has anyone noticed the latest scam, keep the price the same but reduce the amount in a packet? For example, I bought a pack of 4 razor blades the other day for the same price I paid for a pack of 6 a few months ago!!!!! I'll bet it still goes down in the statistics that the price of a pack of razor blades is unchanged!!!