What’s In Our Basket? How UK Inflation Has Evolved Since 1980

At City Asset Management, we use inflation-plus targets to help grow your real wealth over time, but have you ever stopped to wonder what "inflation" actually measures? The answer lies in a shopping basket, although perhaps not one you'd recognise from your weekly supermarket trip.

The Basket That Measures Britain

Since 1947, the Office for National Statistics has maintained a "basket of goods and services" – a carefully curated collection of around 700 items which tracks how the cost of living in the UK changes over time. This basket isn't static, but evolves over time to reflect how we live, shop, and spend our money year-on-year.

These changes (being additions to and removals from the basket) tell a fascinating story about the evolution of British life over the past few decades. From VHS rentals to VR headsets, and Muesli to meat-free sausages, it gives us a flavour of what the UK inflation figures really mean under the bonnet.

With inflation currently stuck at between 3-4%, it is the average increase in price of this ‘basket of goods and services’ which is being reported. Understanding how reflective this is of modern life helps us to understand what these headline figures actually mean.

To keep the content within recent memory, we begin this article from the era of Pac-Man and Madonna:

The 1980s: Continental Comforts and Convenience Revolution

The 1980s marked a turning point in British consumer habits. Duvets, or "continental quilts" as they were rather formally known, became popular enough to enter the basket in 1980, ending the tyranny of hospital corners and multiple blankets.

By 1987, the basket reflected Britain's growing appetite for convenience and broadening tastes in food and drink. Microwave ovens finally broke through (despite being invented in 1947), alongside VHS video recorders and video rentals – the beginning of our love affair with home entertainment. Muesli (supported by Lenny Henry) surged in popularity to find a place in our cupboards, and skimmed milk, salad cream, and frozen oven chips started being favoured over Smash instant mashed potato. We also saw the addition of brie, which remained popular for 30 years before leaving the basket in 2007.

The 1990s: Going Digital and Global

The 1990s brought the digital revolution into sharp focus. Computer games entered the basket in 1993 as consoles entered more and more homes, with the biggest sellers being Mortal Kombat, Sonic the Hedgehog 2 and Lemmings. Foreign holidays also made their official debut that year as flights and package holidays became more affordable.

By 1997, CD players had arrived, and in 1998, mobile phone charges (of 50p per minute, or 10p per text) began being tracked – just the beginning of what would become one of the most transformative technology categories in the basket's history.

The 2000s: From MP3s to Olive Oil

The new millennium accelerated the pace of change. MP3 players appeared in 2003 and, despite Jamie Oliver’s efforts, chicken nuggets achieved official recognition in 2005 (the same year that wartime stalwart corned beef finally departed after 58 years of service).

Some modern staples also hit our cupboards, with chicken Kievs and olive oil entering in 2006/07 and both remain in the basket today, meaning increases in their price (alongside the other 698 items) are what make up the UK inflation figure. Contrastingly, Freeview boxes and Sat Navs also entered in the 2000s, but their popularity was destined to be far more short-lived.

The 2010s: The Smartphone Era

If any single item captured the 2010s, it was the smartphone, which entered the basket in 2011. That same year saw online dating fees included – a sign that even romance had gone digital. The decade brought garlic bread (2010), sweet potatoes (2015), and peanut butter (2019), showing how "exotic" foods rapidly became everyday staples.

Technology marched on relentlessly. By 2019, the hi-fi system, once a status symbol, had been replaced by portable speakers. MP3 players, barely teenagers themselves, gave way to streaming services, and envelopes disappeared from the basket – a small but poignant marker of how texting and email transformed the way we all communicate and connect.

The 2020s: Pandemic Pivots and Modern Priorities

The COVID-19 pandemic forced unprecedented changes to the basket. Hand sanitiser and antibacterial wipes entered in 2021/22 – items which would have seemed oddly specific just a couple years prior, but were now popular enough to warrant an addition. Pet collars also joined, reflecting the 3.2 million pets adopted during lockdowns, and men's suits were swapped for jogging bottoms, a casualty of remote working and Zoom calls where only your top half matters.

By 2025, the basket now reflects our desire for convenience and new forms of entertainment: VR headsets, yoga mats, meat-free sausages, and pre-cooked pulled pork arrived, all replacing oven-ready gammon joints and printed newspaper adverts.

The ONS noted these changes demonstrated "the desire for convenience amidst our busy lifestyles” as well a continued shift towards technology and the online world.

What This Means for Your Investments

When we talk about growing your ‘real wealth’ with inflation-plus returns, what we really mean is ‘growing your wealth at a rate which outpaces the rising average cost of this constantly evolving basket of popular goods and services’, but that is, admittedly, a bit of a mouthful.

That said, we can gather some key insights from this:

1. Some items contribute more than others: The largest contributors to inflation in 2025 were clothing & footwear, recreation & culture, and particularly housing & household services. Other areas such as education, health, and communication make up a much smaller portion of the basket, so understandably a 3% increase on your phone bill has a smaller impact than a 3% increase on your council tax.

    

2. Consumer behaviour shifts: When prices rise sharply for one item, consumers adapt – switching from expensive beef to chicken, or from dining out to convenient pulled pork at home. These substitutions help explain why lived experience of inflation sometimes differs from official figures – we can choose not to pay the higher price and instead switch to a cheaper or similar alternative.

    

3. The ‘average’ does not mean ‘for everyone’: The headline level of inflation is informed by the averaged increase in cost of this basket of goods and services. However, just because large numbers of people are buying VR headsets, it doesn’t mean all of us will be impacted by changes in the price of that product. This means our own personal experience of inflation may differ (sometimes wildly) from the figures you see in the headlines.

Looking Ahead

The basket will continue to evolve, just as it has done for nearly 80 years now. Tomorrow's basket might include AI subscriptions, lab-grown meat, or technologies we haven't yet imagined, but the principle remains the same: at CAM we are committed to growing your wealth in real terms, whatever Britain's shopping basket contains.