INFLATION is affecting us all currently.

And one of the most recent updates surrounding inflation got me thinking.

Our friends at 7IM provided the Future Life Wealth Management team with some very interesting information about the collection of goods that makes up the ‘CPIH’ basket.

Just to be absolutely clear, CPIH stands for Consumer Prices Index including owner occupiers' housing costs and CPI stands for ‘Consumer Price Inflation’.

The Office of National Statistics (ONS) has recently stated: “CPIH is the most comprehensive measure of inflation.

“It extends CPI to include a measure of the costs associated with owning, maintaining and living in one's own home, known as owner occupiers' housing costs (OOH), along with council tax.”

But – in my view - the items it includes aren’t a true representation of our day-to-day lives.  Please allow me to explain why…

The ONS attempt to keep it up to date, but these only serve to highlight how strange a basket of goods it really is.

Since 2018, there has inevitably been an increase in the use of technology that surrounds us, from the ‘Ring’ doorbells we’re now using to the next generation Apple watches that have hit the market…

And these have been reflected in the basket.

The impact of the Covid lockdowns is particularly also interesting as it was evidenced a year after it happened in 2021.

The updates are always recorded in the following March.

For example, there was a clearly discernible a rise in the purchase of hand gels and fitness equipment.

We’ve also seen a clear ‘sustainability trend’ as people migrate to electric and hybrid cars, reusable items and e-bikes.

But - if we then look at what has been removed from the basket - you will see clearly how long it takes for ‘older’ items to be removed…

And that has got me wondering about precisely how accurate the CPIH is.

For example, as recently as 2020 Blu-ray and non-portable DVD players were still featuring on the index.

In 2022, reference books like an ‘atlas’ or a ‘dictionary’ were still present… and the 2023 index included 20 ‘super king size cigarettes’.

In my opinion, the presence of some of these items on the list can – at best – be described as ‘subjective’.

At worst, the presence of those items demonstrates just how non-representative the CPIH basket really is for the majority. 

Nevertheless, we are clearly changing as a society and how and where we spend the money we do have at our disposal has never mattered more.

Please don't ever hesitate to get in touch with me or the Future Life Wealth Management team HERE if we can ever help with your finances.