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Jan 28, 2022

ONS developing ‘radical’ method to better measure inflation

The Office for National Statistics (ONS) is "transforming" the way it measures prices of consumer goods so it can better present UK monthly inflation rates.

The change comes amid concerns that the 5.4% inflation rate recorded in December does not reflect the dramatic increase in prices of goods of 100% or more consumers are experiencing.

To produce its headline inflation rate, the ONS combines 180,000 price points of 700 goods and services with spending patterns to calculate accurate price changes.

It will now use "hundreds of millions" of price points sent directly from supermarket checkouts to show "what has been sold and for how much, giving [it] even more detail on how inflation is affecting UK households".

Campaigner Jack Monroe, who is credited with sparking national discussions that has led to the changes, said she was "delighted" about the announcement from the ONS.

Independent economist and fellow at the right-wing Institute of Economic Affairs, Julian Jessop, said "this is a continuous process" driven by technology, not activism.

He added: "That said, Monroe and others are right to draw attention to the additional pressures faced by poorer households.

"Even facing the same rate of inflation, the living standards of poorer households may be at much greater risk when prices surge."

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