Consumer price inflation basket of goods and services: 2023

• In 2023, 26 items have been added to the basket for the Consumer Prices Index including owner occupiers' housing costs (CPIH) and 16 items have been removed out of a total of 743 items.

• The same changes have been made to the Consumer Prices Index (CPI) and Retail Prices Index (RPI) baskets.

• Additions include e-bikes, security or surveillance cameras, frozen berries, and a new, detailed breakdown of rail fares based on transaction data, enabling analysis by ticket type.

• Removals include digital compact cameras, spirit-based drinks, and non-chart CD albums bought in store.

The contents of the baskets for 2023 are summarised in Annexes A and B, and the main changes from last year are discussed in this article and listed in Tables 2 and 3.

The shopping basket

Consumer price inflation is the rate at which the prices of goods and services bought by households rise or fall. Imagine a large "shopping basket" containing those goods and services. As the prices of the various items change over time so does the total cost of the basket. Movements in consumer price indices represent this change.

Within each calendar year, the basket contents are fixed so that changes in the indices from month to month reflect only changes in prices, and not variations in the quality and quantity of items purchased.

However, the contents of the basket and associated expenditure weights are updated annually. This is important in helping to avoid potential biases that might otherwise develop, for example, because of the development of entirely new goods and services. These procedures also help ensure that the indices reflect longer-term trends in consumer spending.

Changes to the items and associated weights are introduced in the February index each year, but prices are collected for both old and new items in January. This means that the figures for each year can be "chain linked" to form a long-run price index spanning many years. In other words, price changes between December and January are based on the old basket, while price changes between January and subsequent months are based on the new basket.

In reality, there are different baskets for the Consumer Prices Index including owner occupiers' housing costs (CPIH), Consumer Prices Index (CPI) and Retail Prices Index (RPI), but the vast majority of items are the same in all three.

Our Consumer price indices, a brief guide: 2017 article introduces the concepts and procedures underpinning the indices. These are described in detail in our Consumer Prices Indices Technical Manual, 2019 and our CPIH Compendium.

Representative items

There are some individual goods and services where spending is so large that they merit inclusion in the baskets in their own right, such as petrol. More commonly, a sample of specific goods and services must be selected that gives a reliable measure of price movements for a range of similar items.

Several factors are considered when choosing representative items, including:

• ease of finding and pricing the product

• availability throughout the year

• amount spent on a particular item or group of items

• variability of prices within a class

• an analysis of the balance across the basket

The allocation of items to groups can be analysed, as in Table 1, and the balance used as a reference point for the update.

Such analysis cannot tell us which items should be priced so choosing a set of items to represent each area remains a matter of judgement.

Various sources of information are used to review and update the basket, including the Office for National Statistics' (ONS) Living Costs and Food Survey, market research data, trade journals and press reports. Changes in retailing are also reported by the price collectors.

The basket contents and changes between years should not be given significance beyond their purpose as representative items used in estimating consumer price changes. Additions and removals should also not be viewed as a simple indicator of increased or reduced popularity.

Timing of changes

Changes to the baskets of goods and services are being introduced with the February 2023 consumer price statistics published on 22 March 2023.

Additions

Several new items have been introduced to represent specific markets where consumer spending is significant or growing and existing items may not adequately represent price changes. For example, infants' dresses and e-bikes have been added. Previously, there has been no representative dress item for younger children despite the popularity of this clothing type, and electric bikes have been gaining in popularity, potentially for environmental and fitness reasons. Frozen berries have been included to represent frozen fruit; this is the first time this category has been covered in the baskets.

Some new items have been introduced to diversify the range of products collected for already established groupings. For example, green beans have been introduced to expand the representation of vegetables.

Computer game accessories were previously included as part of a computer game and accessory package, which was removed in 2013. We are now introducing a separate computer game accessory item with the aim of collecting more prices, spreading the weight of existing gaming items across a wider range of products, and improving the reliability of the overall series.

An existing margarine and low-fat spread item has been split into two for similar reasons; namely, increasing coverage, reducing volatility in the series, and aiding interpretation of the figures. The two new items are dairy spread or margarine and dairy-free spread or margarine. The dairy-free item further expands the range of "free from" products, reflecting the growth in veganism.

As in most years, developments in technology influence the update and for 2023, a security or surveillance camera has been added. This item aims to capture the wide range of video doorbells and security cameras available while ensuring the basket is up to date with the latest smart technology, which is a feature of this product's popularity among consumers.

Analysis of the broad balance of representative items across the Consumer Prices Index including owner occupiers' housing costs (CPIH) highlighted a need to improve coverage across a range of categories including bread and cereals, clothing accessories, and audio-visual equipment. We have added tortillas or wraps, a man's belt, and a soundbar to help improve overall estimates of price change in these categories.

In other cases, new items are direct replacements for the same or similar products. For example, there is already a rail fares item in the baskets, but this will be replaced by six more detailed series in the first change to be introduced as part of our transformation of consumer price statistics. The new series will be based on transaction data and will use over 30 million price points in calculating the index each month, which will improve our coverage and increase the granularity of the data, offering additional insights into the components driving rail fare inflation in the UK.

A final type of addition is where price collection difficulties suggest a change would improve the coverage and quality of price series in specific areas of the baskets. This year, we are adding a new apples item, which will enable us to collect the price of individual apples to supplement the existing apples item, which collects prices per kilogram.  Coverage of the existing item has been falling because of the tendency of small format supermarkets to sell items of fruit individually as they cater more for the lunchtime food trade.

In addition to reviewing the specific items, the annual update considers the types of shops or places where prices are collected. Pineapples and melons are existing items but were previously only collected in supermarkets. However, the wider availability of both products means we can increase our coverage by pricing them in other outlets selling fruit. Conversely, a pre-recorded DVD film, top 40 CD and top 20 Blu-ray disc have been removed from the collection in some supermarkets because of reduced availability.

Removals

It is important that growth in the overall size of the baskets is limited each year so that production costs and processing times may be contained. Several items therefore have been removed in 2023.

In some cases, this reflects low or decreasing expenditure and falls in stock levels for pricing. For example, there is a narrower range of digital compact cameras available for pricing, following a decline in consumer spending, because of the increased usage and quality of smartphone cameras. Equally, non-chart CDs and non-film DVDs have been dropped from the price collection in shops (but not from the internet). The number of quotes collected has fallen as some retailers have stopped selling these items, reflecting the rise of streaming.

In other cases, removal does not necessarily imply that the markets for these goods and services are very small or declining significantly. Some items have been removed to make way for new additions to the baskets within the same grouping. For example, the postage charges item is being replaced by new items for letter and parcel handling services. The aim is to enable us to capture price quotes from a wider range of parcel courier services and to produce a more detailed analysis. Another example is tampons, which have been replaced by sanitary towels. These attract greater expenditure and are currently more representative of feminine hygiene products.

Elsewhere, analysis suggested that there was scope to remove items from certain groupings without any significant loss of precision in estimates of overall price change. This year, the spirit-based drink or alcopop item has been removed from the restaurants and cafes category, one of the cigarette brands has been removed from tobacco, and the two red wine items for European and New World wines merged into one within off-sales of alcohol.

Finally, collection issues can influence changes and, as such, a home-killed lamb shoulder has been dropped. The item was amended two years ago to allow collectors to price the item with or without a bone, but this had little impact on the numbers of quotes they were able to obtain, and we have now removed the item. Lamb remains represented in the basket by lamb chops and steaks.