Financial News

  • 14 March 2014, 10:06

On Demand Video To Help Calculate Inflation

Paid-for on demand TV and movie downloads have been added to the so-called 'basket' of goods and services used to calculate UK inflation.

The Office for National Statistics (ONS) said it was introducing programme streaming services, such as Netflix and Now TV, to its list in place of onlineDVD rental subscriptions.

Also included from February are digital cameras with an interchangeable lens, plant food, men's clothing hire, wild bird seed and canvas shoes.

In terms of groceries, flavoured milk and fruit snacking pots were also added.

Outgoing items includeDVDrecorders, wallpaper paste and tufted carpets.

The ONS updates the basket each year to ensure it reflects up-to-date spendingtrends.

It uses more than 180,000 items each month to measure inflation, with the Consumer Prices Index (CPI) and the Retail Prices Index (RPI) the most-commonly used in public life.

Inflation affects the level of state pensions and benefits and is used by the Bank of England to help monthly interest rate decisions.

The Bank has a CPI inflation target of 2%, which was last measured in Januaryat an annual rate of 1.9%.

RPI, which is a broader measure and includes house prices and council tax, is typically higher than CPI and is currently at 2.8%.

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