What men’s socks show us about the UK economy

UK statisticians have been agonising over their annual update of the Consumer Price Inflation basket. White chocolate or Maltesers? Fruit & veg smoothies or the pure fruit version? It’s the kind of fine-tuning that might make you think measuring inflation was an exact science.

In reality, it would be a very strange household that bought every item in the basket chosen to represent typical consumer spending patterns. People face very different inflation rates because the goods and services they buy vary – in particular, with the low paid spending a much bigger share of their income on essentials. But that’s not the only reason the headline measure of inflation is a poor reflection of individual experience.

The Office for National Statistics collects around 180,000 price quotations each month, in 140 locations around the country, covering the 720-odd items in its basket. For most of these items, it uses an average of the price quotes collected in the first stage of aggregation.

But Richard Davies, a professor at Bristol university who has put together a long-run price database, has pointed out that the dispersion of prices around the average has become much wider over time.

In 1988, a pint of bitter cost around 80 pence to £1 in almost any pub, he told us this week. Now, the “Wetherspoons effect” means that £2 pints are by far the most prevalent. But £3.50 pints are also common and the price range stretches all the way up to £6.

Then take the chart Davies has put together for men’s socks. The median price of around £2 a pair is virtually unchanged since 1988 – suggesting inflation in men’s socks over the period has been zero. But there are now both £1 socks on the market, and statement socks at ten times the price.

“Cheap socks have got cheaper but you can also buy £10 socks, and some people do,” Davies says. He has found countless other such examples, he adds.

Widening regional inequalities go some way to explain this, with lower prices seen in areas with lower real wages. But it’s still a pretty stark illustration of the gulf in Britain’s economy between those who are scrimping and those who are splashing out.