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From The Times
March 16, 2010

Unlikely arbiter of fashion declares death of lipstick

Gráinne Gilmore, Economics Correspondent

Newspaper columnists, television pundits and so-called style commentators are usually credited with identifying the zeitgeist. Not this time. Step forward the number-crunchers from the Office for National Statistics.

The ONS’s snapshot of what we put in our shopping baskets is intended to calculate the cost of living but has the interesting side-effect of illuminating changing habits and fashions.

This is how we learnt yesterday that the reign of lipstick as the mainstay of women’s handbags was over, having dropped, as it were, out of the basket, and that lip gloss had taken over. Another nifty social observation was that the hairdryer is passé. Why? Because it has been replaced in women’s affections by hair straighteners, made popular by the poker-straight tresses of Jennifer Aniston and Gwyneth Paltrow in the early Noughties.

In a sign of an increasingly health conscious Britain cans of fizzy drink have been dropped from the ONS’s “basket” of goods and services in favour of small bottles of mineral water. Cereal bars were also added to the basket. Soaring sales of computer games such as Wii Fit and Guitar Hero also made an impact, prompting the ONS to add a new category for computer games with accessories. Guitar Hero III, which was released in 2007, became the first game to surpass $1 billion (£665 billion) in global sales.

The ONS collects 180,000 prices of about 650 goods and services to calculate inflation, using information gathered by 300 “price collectors” around the country.

Items are also rated on market share, prompting the ONS to replace baby food with powdered baby formula and cartons of fruit juice with bottles. The basket is made up of items that have sales of more than £400 million a year and items are usually taken off the list if sales fall below £100 million.

The two measures of inflation — the consumer price index (CPI) which is the Bank of England’s cost of living benchmark, and the wider retail price index (RPI) — are crucial to workers and pensioners.

CPI inflation is increasingly being used as a basis for workers’ pay deals, while RPI inflation determines the annual rise in state pension payments and other benefits. The cost of many train tickets are also pegged to RPI inflation.

CPI inflation hit 3.5 per cent in January, the highest level since November 2008 and well above the Bank of England’s 2 per cent target, while RPI inflation is at 3.7 per cent.

Inflation has been pushed higher by the increase in VAT back up to 17.5 per cent in January and a 70 per cent rise in oil prices over the past year, as well as the effects of sterling’s depreciation, which make imported goods more expensive. However, the Bank expects CPI inflation to fall back towards 2 per cent later this year.

The need for comfort food during the recession has driven up sales of garlic bread, a staple food from the 1980s, prompting the ONS to add this to the basket in place of pitta bread.

Supermarkets launched 44 garlic bread products last year, up from 31 in 2005, figures from Mintel, the market research company, show. Chicken Kiev, another favourite from the Eighties, remains in the basket.

Mutton, ox liver, Axminster carpets and mangles were all included in the original inflation “basket” in 1947. All of these have long been ejected, but there remain striking similarities between then and now.

The costs of going to a football match or the cinema are still key measures, as are the costs of books and newspapers. Keeping its credentials as the arbiter of fashion, the ONS removed leggings from the basket in 2008. Statisticians would not comment yesterday on whether jeggings (jean leggings) would make it on to the list next year.

• Petrol prices will reach record levels this year, according to research by the AA. It has has warned that unleaded fuel could soon cost £1.20 a litre or more and urged Alistair Darling, the Chancellor, to delay the introduction of a planned 3p increase in petrol duty due on April 1.