16 March 2017

Student ‘luxuries’ will be used to help determine UK inflation

Student favourites such as gin and soya milk amongst those used to determine the cost of living this year, which will determine the UK’s rate of inflation.
ginThe government will be including luxury items that are popular amongst students in the annual inflation basket, which determines how the cost of living is calculated in the UK.

A surge in the popularity of gin, non-dairy milk, flavoured water, and half-coated chocolate biscuits has resulted in these items being added into this year’s ‘inflation basket’, while less popular items have been taken out – such as alcopops, ‘dumb’ phones (aka non-smartphones) and menthol cigarettes.

Spending all your cash on stuff you probably don’t need? Cut out these money-drainers and you could save a packet.

What is the inflation basket?

foodshoppingEvery year the Office for National Statistics (ONS) takes note of items that have gone up in popularity, using them as indicators of how the public spend their money.

A ‘shopping basket’ of these items is then put together by the ONS when compiling data on the cost of living each year.

Some items are taken out of the baskets and some are brought in to make sure the measures are up-to-date and representative of customer spending habits.

Prices of what’s in these baskets (and how much the price has increased or decreased compared to the previous year) will then determine the rate of inflation.

So, if they find that prices of the items in the basket have gone up on average 2%, this will set the rate of inflation at 2%.

Inflation affects loads of different areas of life, but most importantly for students – it will affect how much interest you pay on your loan each year.

What’s hot and what’s not?

inflation basket

What’s in

Gin, bicycle helmets, flavoured ciders, jigsaws, half-coated chocolate biscuits, non-dairy milk, kids’ scooters, flavoured water, men’s base layer tops and cough syrup.

What’s binned

Regular cider, menthol cigarettes, children’s swings, sinks, non-smartphones aka dumbphones, car brake pads, and the fee you pay for stopping a cheque.

Hipsters and inflation

jammy dodgersGin hasn’t been used to calculate cost of living for 13 years due to being out of fashion, but it’s massively risen in popularity recently thanks to an increase in boutique distilleries around the UK.

What used to be seen as a drink only your mum would cry over – hence the nickname ‘Mother’s Ruin’ – is now a hipster favourite, with sales topping £1bn last year.

Similarly, since fruity Kopperberg came about, regular cider is dead and buried, as are alcopops and menthol cigarettes (so last year).

Hipster wellness crazes have also resulted in things like bike helmets, fitness gear and non-dairy products being added to the list. And you can bet it isn’t your grandma’s addiction to jigsaws that saw make it into this year’s basket, either!

When it comes to half chocolate-coated biscuits and cough syrups, however, things are a bit different. The UK hasn’t suddenly gone biscuit-wild and there hasn’t been a cough epidemic (that we know of). These have just been included to expand the ONS’s coverage of biscuits and pharmacy products respectively.

Do you understand how inflation affects the interest you’ll pay on your loan? You’ll find all the info you need here – don’t believe the tuition fee myths!

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