Each year, the basket of consumer goods or ‘shopping basket’, a group of items that are used as benchmarks to measure price inflation, is reviewed in the UK.
The items included in the basket measure the rate at which the prices of goods and services purchased by a household increase or decrease. In other words, inflation measures “the erosion of the standard of living”.
However, after reviewing this year’s basket, the men’s suits and individual donuts were removed from it. Some of the changes to this basket are a result of changes in the way people live due to the pandemic.
According to a BBC report, a typical household in the UK could see its income drop by more than £1,000 this year after factoring in the effects of inflation. UK prices rose 5.5% on average over the past 12 months to January 2022, slightly higher than the 5.4% price increase seen to December 2021. Due to the pandemic, inflation in the world is a common phenomenon. trend, partly due to supply chain issues.
Evolution of consumption during the pandemic
The Organization for Economic Co-operation and Development (OECD), which mainly includes developed economies, notes that the Covid 2020 basket weights for food and non-alcoholic beverages, housing, furnishings, health, communication and miscellaneous goods and services tend to be higher than those in the pre-Covid 2019 basket as spending on these items has been maintained during the pandemic as overall consumption has fallen.
An International Monetary Fund (IMF) working paper noted that due to pandemic shutdowns, staying home and social distancing have led to a sharp drop in spending on items eaten or used outside. of the House. Some households have also reduced their consumption of non-essential items due to lower income, which has further increased the importance of food and housing in their budget.
What’s, what’s in this year’s basket?
This year the UK’s Office for National Statistics (ONS) has added 19 items to the Consumer Price Index and removed 15. Items that have been added to this year’s basket include sausages without meat, canned legumes, sports bras, pet collars and antibacterial surface wipes.
Among the items removed are men’s suits, donuts and charcoal. The suit was replaced with a formal men’s jacket or blazer as the ONS noted a few retailers had pulled the former from their outlets. For this reason, it was difficult for the ONS to collect price quotes. It is possible that the demand for men’s suits has decreased because more people are working from home and therefore do not need as much formal wear.
Other reasons for excluding certain items may be due to changes in the law or environmental reasons.
Coal has been abandoned because its use will be banned in 2023 as part of the government’s plan to combat climate change. Donuts, which represent individual cakes, have also been removed as their sales have plummeted likely due to the rise of working from home. Even so, the multi-pack cake items still remain in the IPC basket.
In February 2022, the weight of housing and household services is the largest in the basket, followed by transport and leisure and culture in the United Kingdom.
In India, on the other hand, the CPI basket consists mainly of food items. Food and beverages weigh about 45%, followed by miscellaneous services (28%), housing (10%) and fuel and lighting (about 6%).
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