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UK: Food inflation rises to 18.2% as it hits highest rate in over 45 years

grocerygazette.co.uk

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Re: UK: Food inflation rises to 18.2% as it hits highest rate in over 45 years

#131

Post by simonh »

titzer wrote: post #116
simonh wrote: post #92

Earlier quoted context omitted.

If wholesale food costs have gone up and they're simply passing that on then they may not be making any more money. Here's wholesale food prices in the US: https://fred.stlouisfed.org/series/WPU578101 In fact you'd expect reduced sales from the higher prices to put pressure on profits. That is what seems to be happening in the UK: https://www.grocerygazette.co.uk/2023/01/31/food-companies-p... But not in the US, wher…

It's both increased wholesale food costs and price gouging. Profits have never been higher all along the board. Everyone in the chain is "passing the cost on" and also taking a little extra cut.

I updated my post, it does look like that's happening in the US market.

Re: UK: Food inflation rises to 18.2% as it hits highest rate in over 45 years

#132

Post by dazc »

908B64B197 wrote: post #82
noelsusman wrote: post #12

Is this at least partially Brexit related? For comparison, the US has seen food go up by around 10% over the same time period, which is pretty high but also far from 18%. https://www.bls.gov/news.release/cpi.t02.htm

It feels Europe is becoming increasingly poor and unsafe, and the situation in the UK has worsened quite a bit since the start of Brexit. Anecdotally, seems there's a lot of British and European expats here in the Valley and they don't seem too keen on returning. We've been getting a lot of international applicants (but work from home was supposed to mean Europeans could avoid moving to the "dangerous" US but work fo…

Brexit was 6 years or so ago. Then we had 3 years of trying to reverse it, then Covid, then Ukraine and, to top that, a Govt that decides fracking for gas is unacceptable and then goes and imports fracked gas from the US.

Maybe best to sum things up as a run of bad luck compounded with gross incompetence?

Re: UK: Food inflation rises to 18.2% as it hits highest rate in over 45 years

#133

Post by TheFattestNinja »

bbayles wrote: post #83
boc wrote: post #35

Demand for food is inelastic, so it makes sense that companies are raising prices as high as possible since people still have to eat. Generally this leads to price competition from other food brands, but when single companies own dozens/hundreds of food brands it’s easy to act like a cartel and keep prices high.

Let's check this empirically. Which cartel-like brands are publicly traded and publish financial reports? We can look at their profit margins next quarter.

P&G and Nestle' are the usual examples

Re: UK: Food inflation rises to 18.2% as it hits highest rate in over 45 years

#134

Post by dougmwne »

908B64B197 wrote: post #82
noelsusman wrote: post #12

Is this at least partially Brexit related? For comparison, the US has seen food go up by around 10% over the same time period, which is pretty high but also far from 18%. https://www.bls.gov/news.release/cpi.t02.htm

It feels Europe is becoming increasingly poor and unsafe, and the situation in the UK has worsened quite a bit since the start of Brexit. Anecdotally, seems there's a lot of British and European expats here in the Valley and they don't seem too keen on returning. We've been getting a lot of international applicants (but work from home was supposed to mean Europeans could avoid moving to the "dangerous" US but work fo…

Well, there is a war going on. Those tend to make life more difficult all around.

Re: UK: Food inflation rises to 18.2% as it hits highest rate in over 45 years

#135

Post by hkt »

packetlost wrote: post #54
boc wrote: post #35

Demand for food is inelastic, so it makes sense that companies are raising prices as high as possible since people still have to eat. Generally this leads to price competition from other food brands, but when single companies own dozens/hundreds of food brands it’s easy to act like a cartel and keep prices high.

If there is anything that drives antitrust action, I imagine it would be food supply.

I suspect the government will use it to drive down standards and unilaterally accept US imports tariff-free, rather than taking on domestic suppliers.

Re: UK: Food inflation rises to 18.2% as it hits highest rate in over 45 years

#136

Post by vanderZwan »

rcme wrote: post #106
clnq wrote: post #60

Earlier quoted context omitted.

The consumer decides what they are prepared to pay for a product, unless the demand is inelastic. And for food overall, the demand is inelastic. Consumers cannot just say "food is too expensive for me, so I think I'm going to to go without it this month". They can choose between the individual products they buy, so it wouldn't be a problem if just some food items got expensive. But the price of food overall is inflat…

Demand for food overall is inelastic, but the demand for specific foodstuffs is elastic. The measure of inflation we're discussing is across all foodstuffs.

Aren't you just confirming what they said?

Re: UK: Food inflation rises to 18.2% as it hits highest rate in over 45 years

#137

Post by andy_ppp »

I cannot believe supermarkets these days, it is insane the increases in prices, I’ve seen £5 for a tube of normal toothpaste and £6 for a tiny Pizza that is sometimes available for £3. How people on modest salaries survive I don’t know.

Quite often I’m starting to notice dark patterns in pricing where things you normally didn’t worry about will have randomly increased by £2-3 and you get the checkout and you’ve spent £25-30 on next to nothing.

I wonder if inequality increases caused by printing trillions of dollars during COVID are anything to do with this inflation? Could it be that making the rich endless more wealthy and increasing asset prices is bad for society?

How do we fix this? Some people think redistribution of the increases the wealthy have had over COVID back to the poor would be a good move, but is this all inequality?

Re: UK: Food inflation rises to 18.2% as it hits highest rate in over 45 years

#138

Post by Tyrek »

titzer wrote: post #116
simonh wrote: post #92

Earlier quoted context omitted.

If wholesale food costs have gone up and they're simply passing that on then they may not be making any more money. Here's wholesale food prices in the US: https://fred.stlouisfed.org/series/WPU578101 In fact you'd expect reduced sales from the higher prices to put pressure on profits. That is what seems to be happening in the UK: https://www.grocerygazette.co.uk/2023/01/31/food-companies-p... But not in the US, wher…

It's both increased wholesale food costs and price gouging. Profits have never been higher all along the board. Everyone in the chain is "passing the cost on" and also taking a little extra cut.

gouging is an incredibly unhelpful context in a macroeconomic sense. In cases of shorter term scarcity (e.g. toilet paper during early covid), you can have instances of gouging. But over a longer-term period where prices are calibrating to demand/supply dynamics, price increases simply reflect the shifting balance between supply and demand.

Should we be concerned about why there are shifts in demand/supply? Sure.(In the case of food, part of this is driven by the UA war and likely other trends in food productive)?

But it is eminently unhelpful to simply attribute increases to 'gouging' and expect that to be the final say.

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