The Humble Meal Deal and the supermarket loyalty card are staples of the British supermarket, but they have had some unintentional consequences for the economy.

Inflation is when your money starts buying less stuff than it used to, like your wallet is on a forced diet. But how exactly do we measure this economic shrinkage?

Essentially, the Office for National Statistics calculates inflation by tracking changes in the Consumer Price Index (CPI), which measures the average change in prices paid by urban consumers for a figurative basket of goods and services, which includes a selection of goods and services that households typically purchase, such as food, transportation, housing, and healthcare.  It’s like budgeting the weekly shop for a very average family… of 67.3 million people.

They collect the prices of these goods and services from thousands of retailers and service providers across the UK every month.  

But what they don’t take into account is that tasty loyalty card discount. Almost every mainstream supermarket uses some form of loyalty scheme, which provides members with exclusive discounts to encourage loyal customers. According to the Competition and Markets Authority, 97% of UK shoppers are members of at least one supermarket loyalty scheme, and on average, shoppers are members of three supermarket loyalty schemes. This means that almost all UK grocery shopping is done at discounted prices, making that ‘basket of goods’ more expensive than what most people are actually paying.

Incidentally, this creates a sense of increased inflation, which leaves us asking how much more expensive your Cheerios actually are and how this affects that oh so important imaginary basket of goods and the inflation calculation.

ONS says this is because they have to base the price recorded on what is available to everyone, which must include that 3% of non-loyalty members.

This is important because inflation figures inform crucial decisions made by the Bank of England, including setting interest rates. When was the last time a politician didn’t wave these figures around to back whatever point they were making that week? If these figures are distorted through skewed retail pricing, that could have all sorts of knock-on effects on policy and the economy 

A high increase in inflation can quickly kill your purchasing power. Suddenly, it costs more to buy the same stuff, but now you’re poorer for the privilege. This can lead to a lower standard of living, especially when wages are as stagnant as a queue at Alton Towers. This often means cutting unnecessary spending, trading down, or having to hunt for bargains like an Olympic sport.

But surely this is accounted for somehow. Well, no, that would require foresight and critical thinking, and that’s always in short supply. So, for a good while, we’ve just been living with figures that, for all intents and purposes, are wrong.

With the cost of living climbing like a squirrel up a bird feeder, figuring out how modern pricing affects economic data isn’t just important, it’s essential. In response to the prevalence of loyalty schemes, statistical agencies may need to adjust how they calculate inflation.

Luckily, the ONS’s number nerds are updating their efforts to integrate grocery scanner data into calculating Britain’s inflation figures.

They have been trying to use prices gathered from scanners to observe a large number of prices rather than their traditional system of observing fewer. It also factors in the different quantities of similar products being bought, allowing them to weigh items more appropriately within the overall calculation.

But importantly, it considers the actual price paid instead of the listed price, which will create a more accurate inflation calculation.

Lisa Birkbeck from ONS said:” These scanner data-based estimates are experimental and are subject to change while we undertake further quality assurance. Our accredited official CPI and CPIH data are based on robust methods and processes and remain the most reliable measures of consumer price inflation available. “

After analysing data with these new methods, including loyalty prices, the Financial Times found that the year-on-year change in CPI for this March was actually 0.4 points lower.

As Louis Ashworth wrote for the Financial Times, “That is a big swing! This is a big deal! It’s clearly materially different*, and — assuming it is actually truer to the reality of inflation — it remains materially significant that the ONS is taking so long to get this improved methodology in place”

They are set to implement changes to the calculation in March of next year

Birkbeck said: “The scanner-based estimates have been published to showcase the potential of the new system, methods and data sources; however, it is appropriate to parallel run the scanner estimates for a year to fully assure the quality of our outputs before we introduce them into our lead measures of inflation in March 2026.”

In the end, inflation might be the only thing consistently rising faster than your rent, your blood pressure, and your debt. But fear not, because change is coming, just not quickly. So, by this time next year, we might have an actually accurate figure for inflation, and ONS will drag its 20th-century calculator into the world of barcodes and scanners.

Until then, brace yourself for another year of inflation stats just aren’t that accurate and remember, next time a politician waves around the CPI like it’s gospel truth, feel free to wave back with your receipt showing 40% off your cornflakes. Until then, we can just sit back and hope because in Britain, nothing is certain except death and rain.

This was ONS’ full reply:

“There are more types of promotions, like multibuy and loyalty scheme discounts, included in scanner data than in traditionally collected data. We can account for the uptake of these offers accurately with scanner data, because we have exact sales revenues per product. In the traditional collection, price collectors only collect shelf prices that are not conditional on other factors, like membership of loyalty schemes or purchases of additional products. However, including more product discounts does not inherently make indices lower. This is because price indices measure price change over time, not absolute price levels.

These scanner data-based estimates are experimental and are subject to change while we undertake further quality assurance. Our accredited official CPI and CPIH data are based on robust methods and processes and remain the most reliable measures of consumer price inflation available. 

The scanner-based estimates have been published to showcase the potential of the new system, methods and data sources; however, it is appropriate to parallel run the scanner estimates for a year to fully assure the quality of our outputs before we introduce them into our lead measures of inflation in March 2026. 

We are undertaking a programme of transformation across our consumer price inflation statistics, including identifying new data sources, improving methods, and developing systems to improve both CPI and CPIH.

We will not be revising our consumer price statistics following the introduction of scanner data in 2026.