TalkTalk launches Digital RPI quarterly index

Annual Retail Price Index (RPI) Inflation is currently running at around 3.5 per cent but if you do most of your shopping online it’s only around a tenth of that broadband firm TalkTalk has calculated.  The annual Digital Rate of Inflation – (DRPI) the equivalent rate if you buy your household goods, food and clothing online rather than in-store – is just 0.3 per cent.

The Digital RPI has been created to track online costs as more consumers turn to the internet to shop. Nearly £1 in every £10 is now spent on goods bought online according to official statistics. The UK e-tail market grew 20 per cent in 2011 and is forecast to grow a further 20 per cent next year1.

The research carried out for TalkTalk by The Centre for Economics and Business Research (Cebr) also shows:

  • Online prices growing by around 2.2 per cent between Q1 2007 and Q1 2012, averaging an annual rate of 0.4 per cent
  • In contrast, the In-store Price Comparator Index shows in-store prices rising by around 6.4 per cent over the same period, averaging 1.2 per cent annually
  • An analysis of historical online prices shows that DRPI is typically 4-5 percentage points lower per annum than in store prices
  • Consumers are twice as likely to spend money on household goods on the internet than in-store

Shehan Mohamed, economist at Cebr said: “As the UK continues to grapple with a double-dip recession, with a combination of high costs of living and a lack of pay increases putting pressure on household incomes, this research for TalkTalk shows that there is a light at the end of the tunnel. If you shop for certain goods online – food, clothing and household goods such as furniture, consumer electronics and white goods – then you will have a much lower rate of inflation than shopping on the high street. And we expect this trend to continue, with the DRPI running lower than the RPI over the next twelve months as energy prices remain elevated, disproportionately affecting high street businesses with relatively higher overhead costs.”

Tristia Clarke, Commercial Director at TalkTalk said: “With such a huge difference between RPI and DRPI, people who don’t have internet access at home are really missing out financially at a time when household budgets are being pushed to their limits.”

According to statistics released last week by the Office of National Statistics more than eight million UK adults have never used the internet.

“As the UK’s leading value for money providers of broadband, we are committed to helping to bridge the digital divide and to bring affordable broadband to more people,” said Tristia Clarke.

“Over the last 12 months we have invested in over 450 local communities to bring them affordable internet access and we have recently helped found Go ON UK, a new charity which aims to make sure every individual experiences the wide range of benefits that the internet had to offer”

Cutting down your utilities bills is just one way families can make a real difference to their household budgets - TalkTalk Essentials phone and broadband currently costs from only £3.25 per month plus line rental from £9.50 per month.

1 Cebr Consumer Insight Report, February 2012