Smart speakers and baking into inflation basket

Question: “Alexa – what is now being used to help calculate the cost of living in the UK?” Answer: “I am.”

Smart speakers, such as the Amazon Echo device (or Alexa), have been added to the basket of goods used to measure the movement of prices.

These price movements of 700 goods and services are used by the Office for National Statistics (ONS) to calculate the rate of inflation.

The latest annual review has also added bakeware but envelopes are out.

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The addition of baking items, such as trays and roasting tins, reflected the success of TV programmes such as the Great British Bake Off.

There are some clear changes from lifestyles in previous decades as the move towards electronic communication, rather than letter-writing, has meant envelopes have been removed.

The three-piece suite and crockery sets, once signs of an upwardly-mobile household, have also been taken out as people tend to buy individual items of furniture, rather than a set. The former has been replaced by single settees and the latter by just dinner plates.

Washing powder was no longer needed as liquid was being used instead, the ONS said. Hi-fi systems have also gone, made redundant by streaming services as well as smart and portable speakers.

However, there is now a place for electric toothbrushes in the basket. Flavoured tea has also been added owing to its rising popularity and increased shelf-space in supermarkets.

In all, 16 items have been added this year, 10 have been removed and 16 modified, with 688 unchanged, the ONS said.

Basket and the economy

Some 180,000 prices are measured in 20,000 UK outlets to calculate inflation, which itself is used as a benchmark for our finances.

This basket of goods reflects contemporary habits and technology to work out the inflation rate, which charts the changing cost of living.

The ONS also aims to ensure that each sector of goods and services, and where items are bought, are reflected adequately in the calculations.

That is why peanut butter, and shop-bought popcorn have also been added this year. Children’s fiction, suitable for six to 12-year-olds has also been added, to close a gap in the coverage of books between illustrated books for infants and teenage literature in the basket.

ONS senior statistician Philip Gooding said: “We want to reflect modern spending habits, and the alterations we have made highlight shifting consumer behaviour, whether that is in technology, the home, or the way we communicate with one another.

“It is important to remember that we change a small percentage of the overall basket.”

Last year, women’s leggings and mashed potato replaced pork pies and lager sold in nightclubs in the inflation basket.