UK Government Adds Broadband ISP Bundles to its Inflation Calculations

The governments Office for National Statistics (ONS) has quietly announced a notable change to the way it measures inflation (Consumer Prices Index (CPI) and Retail Prices Index (RPI)) by adding “bundled communication services” (broadband internet access, phone and TV) to its calculations for the first time.

Inflation effectively represents how a country measures the general increase in prices (what we pay for goods etc.) and any fall in the purchasing value of money. It should be said that telephone charges, internet access and television subscriptions are “already included in the basket” but surprisingly bundled packages have only just been added to help reflect “the way in which people are buying these services“.

ONS – 2012 Basket of Goods and Services

“A number of new items are introduced to represent specific markets where consumer spending is significant, and existing items in the basket may not adequately represent price changes for such goods. For example, baby wipes are being introduced to represent ‘cleansers on the go’.

Bundled communication packages comprising telephone services, internet access and television subscriptions are also included for the first time. The three component parts were already in the basket and its addition reflects the way in which consumers are increasingly buying these services.”

On top of that tablet computers (e.g. iPad, Samsung Galaxy Tab etc.), among several other things, have also been included for the first time. “This mirrors the evolution of computer equipment through desktop personal computers, laptops and now tablets, and they are being introduced to capture price changes in this rapidly expanding market,” said the update.