Taylor Swift against the Bank of England

“Come on, Alphaville, you can’t use Taylor Swift as an excuse for another article about inflation in the UK -“

On Wednesday, we get new figures on UK consumer price inflation, which follow a fall to 2 percent in May – right on the Bank of England’s target. We don’t have that many predictions in our inbox at the moment, so we’re not here to expect even more sell-side economic journalism.

Instead, let’s just look at Deutsche Bank.

For reasons that many readers will instinctively guess, senior economist Sanjay Raja’s preview of the upcoming issue, published on Wednesday, caused a stir at the towers of FTAV:

We’ve written a lot about Taylor Swift at this point, and anecdotally, we think the pop star’s near-ubiquity in business coverage has finally started to fade (although for some newspapers, it’s too late).

Raja, who expects inflation to remain at 2 percent year-on-year, writes:

In the June report, keep an eye on leisure and culture prices. Cultural services in particular could be strong in our view, given Taylor Swift’s UK tour. And given the way concert prices are collected, they are likely to fall into the ONS’ price basket. We therefore expect live music prices to rise by around 10% – building on the 5.7% rise seen in May. Overall, we expect leisure and cultural services inflation (CPI) to rise by around 1.2%.

Readers may remember that we wrote about the “pop superstar drives inflation” thing last year, in connection with Beyoncé’s Renaissance Trip.

As noted at the time, the Office for National Statistics was unwilling to simply confirm or deny Queen Bey’s presence in its inflation figures – that’s because the statistics agency doesn’t want to reveal exactly where and when it collects price data and what products it examines. We speculated that Beyoncé probably didn’t feature in the data, but we may never know.

Here are other relevant points, listed as bullet points because we never learned to write better:

— Event ticket prices are included in the consumer price index for the month in which the event takes place, not the month in which the ticket is purchased.
– We are not knowledgebut we can speculate with some certainty that the ONS prefers to monitor venues that host the same type of event each month (so that they provide comparable data).
– However, we know that the ONS item-level inflation data is somewhat strange.
– We also know that ONS agents take most of their price measurements ‘on or about’ any day of the month.

We contacted Raja, who kindly answered our silly questions. He told us:

The ONS has not told us exactly what they are looking at, but unlike other items in the services basket, live music events do not appear to be restricted to the so-called index collection date – which in this case is thought to be a week earlier, on 11 June.

… So, in some ways, it does indeed look like the impact of the Eras tour is being captured in the price capture data. However (and fortunately for the BoE), this will only be the case in the primary market (and not the secondary or resale market).

Raja believes, based on his team’s discussions with the ONS, that statisticians are less concerned with the precise timing of events than with collecting other prices. He told Alphaville:

(If) our interpretation of the ONS guidelines on live music events is correct, you would still see a pretty strong effect for that part of the basket. It’s small, but it would be something like what we saw last year when Beyoncé came to town!

That’s not what we were led to believe when we spoke to the ONS on this issue last year – and we think a big part of the problem is their refusal to provide clear guidance on these things. But we can see the logic.

If date does matter, then it is worth questioning it.

The 11th number, says Raja, is based on an average of the June inflation data collection dates over the past decade.

Let’s break it down – here are the index survey dates for June since 2013 and all other months since 2022:

As an average since 2013, the readings for June are on the 13th, while the 14th is the average of all months after 2022.

The important additional factor: collection usually takes place on a Tuesday. So in June 2024 the 11th or (less likely) the 18th are the most likely dates:

Next, of course, you have to check when Taylor came to town. Here are her performance dates compared to Tuesdays:

What can we learn from this? Some observations:

Observation 1: This is all unhelpful
If the ONS had indeed collected data “on or around the 11th”, it would have fallen in the gap between Swift’s performances in Edinburgh and Liverpool – which would mean Swiftflation would be unlikely to be reflected in the cost of food or accommodation. And if they had indeed targeted the date of ticket price collection, that would mean Swift would have no influence there either.

However, if data had been collected on the 18th (which has been the case for at least a decade), Swift’s performance on the 18th at the Principality Stadium in Cardiff would have been a bull’s eye, along the lines of “you sank my battleship.”

Observation 2: We don’t have enough information anyway
Of course, a simple match of dates is not enough. We would also need to know that the venues where Swift performed – Edinburgh’s BT Murrayfield, Liverpool’s Anfield, the Principality and London’s Wembley – are among those monitored by the ONS agents. And we have no way of confirming that.

Can we speculate? Of course. We mentioned in our coverage of Beyoncé that the Renaissance The venue where she performed around the collection date – the Stadium of Light in Sunderland – did not seem an ideal candidate for the ONS awards ceremony, as it does not normally host similar (i.e. musical) events.

Well, assumed date Is relevant and the 18th was chosen, the situation may be different with Swift – the principality seems to host a wide variety of events throughout the year.

Unfortunately, tickets are not one of the items for which the ONS publishes detailed price tables, so we cannot compare prices for tickets sold in Wales with those for the primary principality market. So let’s move on to our final observation:

Observation 3: Ugh
If there is a big spike in leisure and cultural inflation, it is undoubtedly partly due to Swift. However, we will have no way of knowing if it was her, unlike many other things that it could have been. That’s a long-winded way of saying that we’ve written a thousand more words about inflation in the UK and are still no closer to happiness. Moving on!

Further reading:
— Beyoncé, statistical nightmare
— A very deep look at inflation forecasts for the UK. Perhaps too deep
— It turned out that cheap inflation did exist after all
— Why is it so hard to find out how much money Taylor Swift makes?