Alcohol-free beer and pet grooming used to measure inflation

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Kevin PeacheyCost of living correspondent

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A shift towards healthy living has been reflected in changes to the way inflation is calculated.

Alcohol-free beer and houmous are among the items added to the virtual basket of goods and services used by the Office for National Statistics (ONS) to chart the rising cost of living.

The ONS collects the costs of 760 products and services across different retailers to come up with the monthly inflation figures. The items are reviewed every year and selected on the basis that they are representative of things that consumers typically spend their money on.

Motorhomes, dashboard cameras, and pet grooming have also been added in the latest review.

“This year, healthier lifestyle choices influence consumer spending, reflected by goods such as houmous and non-alcoholic beer,” said Stephen Burgess, the deputy director for prices at the ONS.

The items added or removed over time offer a fascinating insight into our changing tastes, trends and lifestyles.

Wild rabbit was one item included in the first list in 1947. Tea bags only made it in by 1980.

This time 27 items have been added and 19 have been removed, to finish with a total of 760 items.

The ONS said 0% beer and houmous had been added due to their growing popularity and consumer spending. Caravans were already in the basket but, often expensive, motorhomes are now part of the mix too.

Dashcams represented the growing number of security products available for drivers and allowed the basket to keep up with new technology.

And pet owners were now more likely to use grooming and care treatments for their pets beyond the services offered at a vets, the ONS said.

“Houmous has been a staple of lunch boxes for years but as a plant-based source of protein and fibre it’s becoming more and more popular,” investment platform AJ Bell’s head of financial analysis Danni Hewson said.

She said the trend was accelerating with the increasing take-up of weight loss drugs. A desire to lead healthier lifestyles has also helped no- and low-alcohol alternatives to beer and other drinks into the basket.

And she pointed to a boom in households buying pets during the Covid-19 pandemic, in particular “Doodles”, or poodle-cross dogs with curly coats, driving higher demand for pet grooming.

ONS to use scanning tech

Sheets of wrapping paper have been replaced in the basket by rolls of wrapping paper, which are more common in shops.

Many of the tweaks to the basket have come as a result of a new method of data collection by the ONS.

It will use supermarket scanner data for more than half of the grocery market.

Thousands of manually collected prices will now be replaced by millions of prices collected automatically from supermarket tills.

Once all the data is collected and processed, it provides everyone with the UK’s inflation rate - an economically significant publication that is widely used to measure the rising cost of living.

Benefits, pensions, and interest rate decisions by the Bank of England are all affected by inflation.

The government has set a 2% target for the Consumer Prices Index (CPI) measure of inflation. The most recent published rate was 3% in January.

Official forecasters had expected that to drop to 2% by the end of the year, but that is now considered far less likely owing to the economic fallout from the war in Iran. A rate of closer to 3% is now predicted.

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