E-commerce to count in inflation statistics

E-commerce sceptics take heed, the government is watching the Net and it thinks it's important too...

The government is considering including online shopping in the retail prices index (RPI) proving how seriously it takes the impact of e-trade on the economy.

The RPI is taken as a measure of inflation and the Office for National Statistics (ONS) is considering including Internet shopping in next years' index. Currently 600 items are included in the RPI, which is updated every year to reflect what the average family are spending their money on.

"The RPI is based on a family expenditure survey and we are considering the inclusion of an Internet shopping question in the next survey," says an ONS spokesman. Although this may happen as early as next year, he is not sure online shopping will have as big an impact on inflation as some reports have suggested. "How many average families even have access to the Internet yet?" he asks.

Professor of economics at the London School of Economics Danny Quah thinks the plan illustrates that the government believes e-commerce could have a major impact on the future economy. "It is a move in the right direction and shows the government is taking e-commerce seriously. It is probably a case of the tyranny of sheer numbers, with European e-commerce growing at over 100 percent per year, it cannot be ignored," he says.

Quah believes e-commerce will improve the efficiency of trade with more personalised and specialised services but is less convinced it will lead to lower prices. "The idea is that the more trade occurs on the Internet, the more consumers will seek out lower prices and prices in general will fall," he says. Quah thinks the impact of e-commerce is more ambiguous as many traders will offer different levels of services to different groups of people. "Amazon.com may offer a personalised service to a certain clientele for which they will pay higher prices," he says. He is less pessimistic that e-commerce will create a two-tier economy, with online discounts only available to a select few of Net-savvy users. "Most governments are taking an enlightened view about Internet access and I think the idea of information-haves and have-nots has been overplayed."

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