David McCorquodale, head of retail at KPMG, comments on today’s changes to the basket of goods and services used by the Office for National Statistics (ONS) to calculate inflation*:
“The basket of goods offers us an interesting window into what the average British shopper buys and the factors influencing their spending. The impact of technology, energy prices and the shockwaves of austerity can all be felt here."
“The unstoppable march of technology has seen consumers turn away from DVD recorders and favour the ever-available online catch up players and video streaming services instead. This switch to a more convenient service is reflected in the ONS’s updates and indicates how the modern consumer wants to receive their services: at the time and on the device of their choice."
“Interchangeable lens digital cameras have also been included in the basket for the first time, after storming ahead of the traditional compact camera. The compact is struggling to compete against improving phone camera technology and the understandable preference of consumers to carry one device which can fulfil multiple needs. The convenience and added connectivity the camera phone offers means it will be hard for the compact to compete in the future unless manufacturers can offer something new for consumers."
“Consumers are technologically confident and are happy to switch from traditional products to new, innovative, technology if it offers them an enhanced, more convenient service."
“The changes to the ONS basket also show how austerity has hit the average UK consumer. After a prolonged recession sales of hardwood flooring have been so low that the ONS has stripped this category out. As the housing market recovers, and people for more inclined to invest in their property, I would expect sales of flooring to rise; we may see a reappearance of this, or an equivalent item, in the future.”
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Note to editor
* The ONS’ 'shopping basket' of items making up the suite of consumer price inflation indices (CPI, CPIH, RPIJ & RPI) are reviewed every year and amended to reflect changes in the market and to make sure the basket is representative of consumer spending patterns.
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This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.