London Briefing: inflation basket shows changes in society

Hipsters may have been declared passé by the trend-spotters but their influence is going mainstream thanks to the team of government number crunchers at the Office for National Statistics.

Along with other leading economic indicators such as unemployment, earnings and gross domestic product, the ONS is responsible for calculating Britain’s inflation rate.

It does this by tracking price movements on a basket of more than 700 items each month, with the statisticians collecting data online and from thousands of shops up and down the country. In total, about 180,000 separate prices are collected from 140 locations each month and the inflation rate is based on changes to those prices. Also included are gas and electricity bills, cars, holidays, nursing-home costs, childminder fees and football season tickets.

The contents of the virtual inflation basket are updated annually to reflect changes in consumer trends and the results of the reshuffle provide a fascinating insight into changing lifestyles.

The 2015 basket owes more than a little to the influence of the hipster – in come craft beer, ecigarettes, headphones and music subscription services such as Spotify, and out go sat nav devices, foreign exchange commission fees and cut lilies.

Changing preferences

In food, changing consumer preferences are reflected by the inclusion of sweet potatoes and melons. Liver has also made it back in after being kicked out in 1999 but out goes braising steak. Frozen pizzas have been removed but are being replaced by chilled pizzas, which are now more popular than frozen ones.

Spending on yoghurt drinks is also in decline, so they exit the basket too. But protein powder drinks favoured by gym fanatics have been introduced for the first time, reflecting the growing popularity of the sports foods supplements sector.

Another substitution to the basket highlights changing consumer tastes in decor – white emulsion paint has been replaced by coloured emulsion as the trend to minimalism gives way to more colourful interiors in Britain’s homes.

The exit of sat-nav systems from the basket reflects the growing use of smartphones as navigation devices; another factor is the trend towards built-in devices in new cars.

New technology is well represented in the updated basket – mobile-phone accessories such as chargers and cases have been included to reflect the rapidly growing market and, in online services, music-streaming and gaming-console subscriptions have been added. Headphones have been included to reflect increased spending on audio-visual equipment accessories, according to the ONS.

The inflation basket has been around since the 1940s but its contents were very different – the first included unskinned wild rabbit, cod liver oil, condensed milk, wool caps, mangles, tin kettles, corned beef, candles and corsets.

Innocuous

It was on budget day two years ago that Barclays Bank quietly slipped out a stock exchange announcement under the innocuous heading "Director Shareholding".

While the headline of the statement was unremarkable, its contents were explosive – shares worth almost £40 million (€55.7m) had been released to its executives, including the then investment bank leader Rich Ricci, who scooped £17 million.

If it was the bank's intention to bury bad news on a busy day, it failed spectacularly. Despite the budget, the Barclays windfalls attracted huge publicity, even ending up on some of the front pages alongside George Osborne.

As well as the way in which the announcement was made, there was widespread anger at the excess of the payments, which came less than a year after the bank was fined £290 million for its past in the Libor-rigging scandal.

This year, the Barclays share-awards announcement was made on the eve of the budget. So on Tuesday we learned that 11 of the bank’s top executives shares more than £16 million between them in shares from deferred bonus schemes and new stock awards. It may be a lot less than the near £40 million of two years ago but, even for bankers, it’s still a sizeable windfall.

Once again, the head of the investment bank has reaped the biggest reward – Tom King received 1.86 million shares, worth £4.7 million. This is despite the fact that the investment bank's profits fell by almost a third last year.

The second biggest beneficiary was the chief executive, Antony Jenkins, whose 1.7 million shares were worth £4.3 million.

Fiona Walsh is business editor of theguardian.com