Digital music drives UK economy

Filed in archive Society & Public Policy on March 23, 2006

digital downloads and MP3 players are now factored in the UK Inflation Index. The Index is maintained by the Office for National Statistics (ONS) and used by the UK Treasury and Bank of England. While digital products have been added, others items like slippers and chocolate cookies were dropped.

This actually makes little sense as prices are set by suppliers (downloads) or at consumer pricepoints (players), and so have little relation to demand.

More on the Index:

There are 650 products held on the watch list at any time, and the ONS gathers 120,000 price points related to those products in any given month. It then uses those figures to guide its main measures of inflation, the Consumer Prices Index (CPI) and the Retail Prices Index (RPI). The Bank of England uses the CPI as its inflation target, while the RPI is used to help set many state benefits.