Eachmonth a team of 292 people goes shopping on behalf of the nation. They visit village post offices, department stores, petrol stations and pubs, seeking out, at the most recent count, 211 ladies’ handbags, 566 cabbages and 286 ballpoint pens. The shoppers don’t actually buy anything. They record the prices they find, check them, then publish the monthly results so the rest of us can put a figure on how much richer we feel, or how much poorer.

The price collectors’ task is to measure the cost of goods in the UK. Not the cost of living – a confusion that excites statisticians’ displeasure – but the cost of a defined basket of goods. The contents of the basket, updated each year by the Office of National Statistics, currently includes analgesics and replica football shirts. There is smokeless fuel. Iceberg lettuce. Calls to directory inquiries. Airport parking. Nannies. Soft continental cheeses. The basket tracks our spending and, in turn, we use it to track our changing mores. Things get moved into it – last year, antibacterial wipes and sports bras – and, when fashions change, drop out. In 1947 the first inflation basket tracked distemper, winceyette and a Windsor chair.

The price collectors’ results are used to work out three different numbers – the RPI, CPI and CPIH (I’ll return to these later) – each of which is liable to be referred to as the national inflation rate; the preference for one or another can be the crux of litigation on which billions are at stake. For this reason, inflation may be the UK’s most controversial national statistic. It’s certainly the most consequential. It moves markets and it determines monetary policy: it moves markets because it determines monetary policy. But none of that is a price collector’s immediate concern. They need to know a New World red from a European one, and how to distinguish a wool carpet from cheaper imitations, gathering data without prejudice on each variety.

The prices they collected towards the end of 2022 showed that inflation was higher than at any point in a millennial’s lifetime; higher than at any point since the prime minister was in nappies (nappies cost 18 per cent more than they did last year). Of course, inflation isn’t the only problem with the UK economy: productivity is flatlining and house prices are at a record multiple of the average salary. But inflation is unusual among economic problems in having its own ready-made metaphor; this ‘basket of goods’ which is also stuffed with services, and whose contents – even without the challenges thrown up by trade union subs, pet insurance or the cost of window-cleaning for a three-bed semi – no actual basket could ever contain. In reality it’s a list, comprising more than seven hundred items, including small caged mammals and kerosene.

Though items are added to and taken away from the basket over time, it’s important that they don’t change too much while they’re in there. A large white loaf (unsliced) needs to weigh between 750 and 800 grams to be judged comparable to others that have gone before. Jars of peanut butter must be 225-300g (but the container doesn’t have to be a jar). Not any cut flowers, but carnations on the stem. Bras must be sized in the A to D range. A gent’s watch with an analogue face. A nine-carat solid gold ring.

If the price collectors can’t locate an item, or it’s on sale, or they find it altered beyond useful comparison, they record this information using a code. W: the manufacturer has changed the product’s size. S: a special offer is affecting the price. M: missing. The raw price-tables published online each month are littered with these letters, tiny traces of perturbations in the currents of world trade. Most of us are familiar with the effect the war in Ukraine has had on products containing sunflower oil, or that Brexit has had on prices in general. But perhaps truck drivers in South Korea are on strike; or a ship has capsized, spilling its cargo, off St Simons Sound; or Nigella Lawson has been on TV, prompting a run on a certain sauce. The data analyst Peter Donaghy credits the pop group Little Mix with spiking Northern Ireland’s inflation rate in April: their two stadium concerts in Belfast encouraged hotels to increase their prices, which had an outsized impact on the main figure owing to the confluence of small sample sizes, the time of the month at which prices were collected and a high weighting for hotel accommodation in the overall index.

The inflation basket has itself suffered from inflation. In 1947 it was less than a third of its current size. So now the ONS tries to take something out of the basket for each thing that goes in. A complex set of criteria govern the inclusion of new items but, like most door policies, it’s a judgment call. An item may be introduced once it accounts for a certain amount of nationwide spend (£400 million is the current threshold), or the price collectors notice a lot of shelf space given over to it. They monitor news reports and trends. In the final calculation, weightings can be adjusted to take into account household expenditure – electricity bills account for a high share. The basket tracks the vicissitudes of three different brassicas because fruit and vegetables have complex individual supply chains: they are imported in different currencies from different places in different seasons. But the ONS is content to let a spade stand in for a hoe and a rake, because prices for garden equipment tend to move together – or so the price collectors have observed.

Men’s suits were ditched from the basket last year because of sartorial changes wrought by the pandemic. In the same update, home working did for the doughnut. Price collectors stopped tracking both medium and large eggs, not because either size was falling out of favour but because a medium egg tells you very little that a large egg cannot. ‘Changes to the sample from year to year should not be afforded significance beyond their purpose as representative items,’ the ONS warns. Yet for the undeterred, the basket provides plenty of material for sociological observation. Meals out were added in 1968, duvets in 1980. To judge from the basket, we are a nation addicted to loose slices of cooked ham and individual meat pies. Indigestion tablets. Takeaway kebabs. Chicken Kiev (still). Garlic bread is in there, but garlic is not. Lemsip makes the cut (‘cold/flu drink powder’); cream liquor 70cl; malted chocolate sweets.

In compiling the basket the ONS aims for longevity. They do not want another MiniDisc or MP3 player, both of which were ditched after three years. Items tend to come up for review on a five-year cycle; the few that have been dropped sooner underline the risk of cleaving too closely to the zeitgeist. Wine boxes lasted from 2006 to 2009. Dog bowls had a similar shelf life, along with slices of processed cheese. At the end of 2021 the price collectors mooted the inclusion of antiviral face masks, one ONS statistician told me, but they figured antibacterial wipes and hand sanitiser would affect our purchasing habits for longer. Sometimes an item remains in the basket long after you think its moment has passed. The ONS still tracks dating agency fees, watch battery replacements, and four different packs of cigarettes as well as rolling tobacco and e-cigarettes.

Last year the poverty campaigner Jack Monroe complained in a viral tweet thread that headline inflation numbers were failing to capture how much more steeply the cost of budget food items was rising for the poorest. Monroe was right, which was nothing statisticians at the ONS weren’t already aware of. It has long been their practice to report the basket’s food and drink as a separate number, which usually runs higher than the main rate. By the middle of last year the ONS had introduced a new index tracking thirty basic foodstuffs, which showed prices climbing faster still.

The data for the new index were scraped from supermarket websites, sidelining the price collectors and their tables. Although it was an experiment, confined to a group of ingredients you could almost fit in an actual shopping basket, it presaged a long-planned upheaval: from next year, supermarket transactions will be the source of grocery prices in the main basket too. The process for collecting information on rail fares and second-hand cars will change even sooner: by the spring, 400,000 price quotes will be supplied each month by Auto Trader.

By pointing out some of the ways in which the official data obscure the fact that it’s more expensive to be poor, Monroe laid bare one of the major limitations of price statistics: tracking the price of goods is different from tracking the cost of living, which is what the inflation rate is often supposed to be doing. The vogue for the phrase ‘cost of living’ may be one source of the confusion (in 2022 it was uttered 3223 times in Parliament, a tenfold increase on the previous year). The basket-of-goods approach makes clear how quickly a pre-defined list of items is rising in price. Inferences can be made about how quickly life is getting more expensive for the people who would buy those items, and the ONS does that too (the inflation-by-income-decile figures bear out Monroe’s hunch). But when prices are as volatile as they are now, a basket of goods obscures substitution effects. It shows the pace at which electricity costs are rising but not that many people can’t afford to switch theirs on. In these circumstances inflation rates may even be lower in practice than the basket lets on, but only because some are making do with less. Since the late 1950s, the ONS has estimated in advance how much we’ll spend each year by consulting the diaries in which a random sample of UK households have been asked to document their expenditure – a method it knows to be imperfect. In time, big data will likely be aimed at this problem too, and then new imperfections will doubtless emerge elsewhere.

Distinct from the shortcomings of collection methods are iniquities in the way inflation statistics are applied. Public sector pay has lagged behind inflation since the Tories came to power. State pensions rise in line with it; so do unemployment benefits. The income tax threshold doesn’t, any longer, but the allowance for married couples does. Sometimes the swizz is more subtle. The meagre allowance received by people seeking asylum in the UK rises in line with the headline inflation rate, not the higher rate that pertains to the essentials it is designed to be spent on. Still, at least it rises: the additional £5 support payment for infants in asylum seekers’ families hasn’t changed in two decades. At my local supermarket it now buys half a box of the cheapest baby formula or two-thirds of a sippy cup.

Another strange form of commerce haunts our price statistics: inflation shopping. In 2003, the method of calculating inflation known as RPI (the Retail Prices Index) was demoted in favour of CPI (the Consumer Prices Index) and later lost its status as a National Statistic altogether: in 2010 a tweak to the methodology for clothing components sent it haywire, exposing flaws in the formula that had been there all along. It meant, among other things, that UK gilt holders were overpaid, and that students with loans were overpaying. Since 2018, the government has committed not to tie anything new to RPI, yet somehow ordinary people remain at the stingy end of the arbitrage: plenty of taxes still rise in line with RPI, even while state benefits have shifted to CPI, the lower rate.

The ONS will continue to publish RPI each month in part because of the awkward fact that it was cited in the payout terms of bonds worth £470 billion around the time of its disgrace – the last of these index-linked gilts doesn’t expire until 2068. Huge fortunes rest on the question of how and whether to fix it, which has led, in the words of Michael Forsyth, a former chair of the Economic Affairs Committee, to a ‘ridiculous merry-go-round’, with a decade of select committee hearings, consultations, independent reports and court cases attempting to balance the interests involved. Pensioners’ representatives told the high court last year that if RPI were ‘improved’ it would erode the value of ten million people’s retirement savings; the judge found against them.

The ONS meanwhile wants to steer inflation watchers to its newest index: CPIH. CPIH is like RPI made good. Its basket has 733 items to CPI’s 727, because it accounts for housing expenses, which CPI ignores. And yet, despite being crowned the ONS’s headline measure of inflation six years ago, it hasn’t really taken off. CPIH is more comprehensive, the ONS reminds people, a truer ‘cost-of-living index’, but most continue to favour CPI.

Unlike GDP growth or trade imbalances, inflation gets close to measuring something that people can feel. It is easy to forget this, because a market logic so often creeps in and addles the brains of those who follow it most closely: Larry Summers, against a background of tropical palm trees, pronounced that ‘there’s going to need to be increases in unemployment to contain inflation’; Andrew Bailey, against a backdrop of record corporate profits, urged restraint on pay and, leading by example, said he would forego any increase to his £575,000 remuneration. The best rubric for understanding inflation may be conflict – distributional conflict – Olivier Blanchard said recently. The basket can tell you a lot about inflation, but some wisdoms slip through the mesh.

Send Letters To:

The Editor
London Review of Books,
28 Little Russell Street
London, WC1A 2HN


Please include name, address, and a telephone number.

Read anywhere with the London Review of Books app, available now from the App Store for Apple devices, Google Play for Android devices and Amazon for your Kindle Fire.

Sign up to our newsletter

For highlights from the latest issue, our archive and the blog, as well as news, events and exclusive promotions.

Newsletter Preferences