The basket of goods that is used to calculate consumer price inflation by the Office for National Statistics (ONS) has been updated. And it’s official, air fryers are in.
While the current rate of inflation is 4%, Jeremy Hunt said in his Budget last week (6 March) that he expects it to fall further.
To calculate inflation, the ONS uses a typical basket of goods to work out the rate at which the cost of goods and services are rising. To do that, it looks at what households are buying. Today (11 March) it has reshuffled this basket to consider what we are buying now.
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This year, one of the items making its way into household shopping baskets is the air fryer. This popular kitchen appliance (which circulates hot air to give your food a deep-fried crispiness, but without the oil) saw a boom in sales during the pandemic. Its affordable price tag and low energy usage has also been a selling point amid the cost-of-living crisis, when energy prices soared.
Other items that have made it into the basket in 2024 include gluten-free bread, sunflower and pumpkin seeds, rice cakes and spray oil.
And, if you’re old enough to have bopped along to the Beatles, The Who, The Smiths or their contemporaries back in their heyday, you’ll be tickled to know that your kids think you’re cool. Vinyl records are back, and have been re-added to the basket for the first time in more than thirty years, “reflecting a recent resurgence in popularity”, says the Office for National Statistics (ONS).
Some items have been removed too – hand sanitiser, for example – while others have been updated. For example, takeaway tea and takeaway coffee were previously two items, but have now been merged into one (“takeaway hot drink”).
We give a full roundup below, explaining how the basket of goods works, before delving into the outlook for inflation.
What is the CPI basket of goods?
The main measure of inflation used in the UK is the Consumer Price Index (CPI). This is essentially a basket of goods and services that the ONS has put together to calculate consumer price inflation.
The basket is meant to be representative of what the average consumer buys and uses in day-to-day life. It includes everything from food and drinks to clothing, transport, education costs and hotels.
Each year, the basket of goods is updated slightly to reflect changing consumer habits. This is why air fryers, among other items, have been added this year.
The ONS tracks how much the basket of goods and services has changed in price each month. Doing this allows it to calculate how much prices are going up and down.
The Bank of England looks at this measure closely when setting interest rates, and the public is interested in following it to get a better sense of how their day-to-day costs are changing.
What does the CPI basket of goods tell us about changing consumer habits?
There is always a good deal of interest when the ONS updates the basket of goods each year. It tells us what Brits are buying and, in doing this, gives us a sense of how consumer trends and the world around us are shifting.
“The key takeaway from this year is that the pandemic is officially in the rearview mirror, as hand sanitiser is removed from the list of the most popular items we all buy”, says Laura Suter, director of personal finance at AJ Bell.
“At the same time, rising energy costs have altered our spending habits, with air fryers now making it into the basket, as people looked for cheaper ways to cook”, she adds.
The addition of air fryers this year (as well as sunflower and pumpkin seeds, rice cakes and spray oil) also points to the health and wellness trend that is booming in the social media space, and influencing many people’s day-to-day eating habits.
This follows in the wake of the pandemic, which also prompted many people to make healthier lifestyle choices that have stayed with them to this day.
One addition that didn’t quite make the list this year, Suter highlights, is electric cars. “They are undoubtedly more popular than in the past, but concerns about the high cost of insurance and range-anxiety have stalled adoption – meaning that the ONS decided not to include them this year”, she explains.
“We also considered adding electric car charging at public sites to the basket but decided against for this year”, the ONS stated when it released the latest updates. “We will continue to monitor it with a view to introducing it in future”, it added.
Inflation: is it still high, and where is it heading next?
Public interest in the CPI basket of goods has almost certainly been higher in recent years, given the prominence of inflation in the news headlines and our daily lives.
Since 2021, we have lived through the highest level of inflation experienced in a generation. First a pandemic, then supply chain disruption, and finally the outbreak of war in Europe – all of these factors contributed to prices skyrocketing. UK inflation peaked at 11.1% in October 2022.
Inflation has since fallen to 4%, as inflationary pressures eased and central banks hiked interest rates in an attempt to cool the global economy. The Bank of England has raised rates fourteen times since December 2021, and is now holding them at 5.25%.
While inflation remains high, the good news is that we appear to be well past the worst.
Forecasts published by the Office for Budget Responsibility (OBR) after Jeremy Hunt’s Spring Budget on 6 March suggest inflation should average out at 2.2% over the course of 2024. The OBR expects the average to be 1.5% for the duration of 2025, before climbing back to the Bank of England’s 2% target.
The next CPI figure will be released on 20 March, and is expected to be lower than the current 4%. The Bank of England’s next interest rate meeting will then take place on 21 March.
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