Inflation has dropped – but does this really mean we’re better off?

The cost of meat and chocolate biscuits has gone down, so that’s dinner sorted (Picture: Getty)

If you buy a big packet of Taste the Difference crisps in Sainsbury’s today, it will cost you £1.50, compared to 99p a year ago.

That’s a big increase – and would mean inflation stood at 51%, if we only looked at this specific potato snack as a marker.

Thankfully, the overall figure for price increases is much lower, according to the government, who are celebrating the official inflation rate dropping to 3.2%, the lowest it has been since September 2021.

It’s still well above the target of 2%, but moving in the right direction, and significantly below the 11.1% peak in October 2022.

So that’s something to celebrate, right?

Not necessarily, according to cost-of-living campaigner and qualified accountant Polly Arrowsmith, who told Metro.co.uk she has been tracking prices of things she spots in the shops, and thinks the real picture could be much bleaker.

She said if people feel their money isn’t going anywhere near as far as it used to, then it probably isn’t – and they won’t be the only ones feeling it.

Overall inflation in the UK each year from 1988 to what it is projected (or hoped) to be in 2028

The inflation figures themselves should be taken with a pinch of salt, she added, as the ‘basket’ of typical items measured is not consistent and statisticians regularly swap out cheaper or more expensive items.

Statisticians say this is to make sure typical products are included, with trends changing every year.

But Polly claims it can also ‘manipulate the figures’ with things swapped in which are not like-for-like.

What is in the ‘shopping basket’ of typical items?

Goods and services commonly bought by UK households, ranging from clothing to hotel stays and air fryers, make up the Office for National Statistics’ hypothetical basket.

ONS statisticians set out details each year of items added or removed from the ‘basket’ used to track prices in their methodology, which currently includes 743 items.

For example, gluten-free bread, sunflower and pumpkin seeds, rice cakes and spray oil were added this year.

Hand sanitiser gel has been dropped as it is no longer an everyday item in the same way it was at the height of the pandemic.

And ‘home-killed pork chop with bone’ (a household staple?) has been switched for a broader category which can include chop or steak. Pork products are responsible for much of the drop in meat prices in the latest figures.

Polly said that statisticians joke that soon a can of dog food could be swapped in as a meat option, which would help make the rate lower as it could be bought for much less money.

This supposed manipulation isn’t the only potential issue with the data.

How is inflation measured?

The Consumer Price Index (CPI), which is the measure discussed in headlines today, looks at household goods and services but doesn’t take into account housing costs, which take up a huge proportion of income for many people in the UK’s current housing crisis.

Housing costs including rent, mortgages and council tax are included in a separate inflation measure (CPIH), which is considered by the government but isn’t talked about as much, and currently stands at 3.8%.

Polly says that many she speaks to don’t understand inflation rates are rolling figures looking only at the exact period 12 months before, and adding onto whatever price increases were already in place then, rather than things dropping in price as a whole.

Soon you’ll need actual gold to buy the gold bunnies (Picture: Getty)

The March figures cover the run-up to the Easter period, when lots of seasonal products were available in the shops.

Polly said this is a good example of how prices have increased, with chocolate lovers especially feeling the pinch due to a cost increase in the raw material of cocoa.

What are some examples?

‘All Lindt is at least 50% more than it was 12 months ago,’ she said. ‘The giant Lindt Bunny weighing a kilo, e.g. was £35 in 2022, £39 in 2023, and £65 in 2024, a 66.67% increase in 12 months.’

Meanwhile, while prices may seem to remain the same, the product itself can change.

‘Kraft has changed the chocolate formulation for Creme Eggs, using less cocoa and more sugar to make manufacturing cheaper,’ she said.

They also got smaller, and now have five eggs in a pack instead of six, but as this happened incrementally over several years, it didn’t cause a lot of fuss.

‘You have to be sharp-eyed,’ Polly said. ‘Shiitake mushrooms were 150g for £1.29 at Sainsbury’s [her local shop], and now they are £1.49 for 125g since December 2023. That is a 16.67% decrease in size, and they held the £1.29 price for about two months and then increased it by 20p, a 15% increase. This is a change of over 30% in 4 months.’

‘I have a great memory, and most people will not see it.’

Was today’s rate change expected?

The rate announced today is still higher than analysts predicted, as they were expecting 3.1% for the month.

So it’s unlikely the Bank of England will be quickly cutting the base rate of interest, which dictates the amount it will cost people to borrow money for loans including mortgages.

Food price rises have slowed down but things are still a lot more expensive than two years ago (Picture: Rex)

ONS chief economist Grant Fitzner said: ‘Inflation eased slightly in March to its lowest annual rate for two and a half years.

‘Once again, food prices were the main reason for the fall, with prices rising by less than we saw a year ago.

‘Similarly to last month, we saw a partial offset from rising fuel prices.’

Inflation for food and non-alcoholic drinks dipped to 4% for the month, from 5% in February, to reach its lowest level since November 2021.

The increased slowdown was partly driven by a fall in meat prices and lower rises for bread and cereals, the ONS said.

Other foods to see price falls included crumpets and chocolate biscuits, but the cost of fuel went up in price.

Yesterday, official figures showed regular wages growth (not including bonuses) at 6% in the three months to February, which was a slight fall from previous growth but also above economist predictions.

Economists expect inflation for April to show a further fall in inflation, supported by another drop in energy prices, as CPI moves closer towards the central Bank’s 2% target rate.

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