to not be sure why politicians think food prices should be falling?

[cakeorwine]

Saw this headline

Supermarkets under pressure to explain high prices - BBC News

We have high food inflation. Lots of causes for that.
The rate of increase is slowing down - but it's still an increase.

If we saw food prices decreasing compared to the year before, then we would see food deflation - and I can't see that happening given all that goes into making food, delivering food and selling food.

I can see the rate of increase decreasing - but will we see food deflation?

Am I missing something - why do politicians think we should be seeing food deflation?

I do think some supermarkets are profiteering from the cost of living crisis. I've seen some adverts recently saying they're dropping their prices on xyz. Might be a marketing gimmick but maybe also the start of a price war.?

But will we see food deflation?

I don’t understand this either.

I assume it’s because some of the key causes of high food prices - such as high commodity prices - are beginning to resolve. I’m guessing food inflation is not so much driven by eg
labour costs.

Interesting article here which says we are more likely to see disinflation.

https://www.morningstar.co.uk/uk/news/235471/deflation-vs-disinflation-whats-the-difference.aspx

Interesting CNN article on deflation

Yes, inflation is coming down. That doesn't mean goods and services will be cheaper | CNN Business

"If inflation falls to 2% by the end of this year, that means the cost of everything will no longer be going up, right? Wrong. But that’s what the majority of UK residents think, according to a new survey from polling group Survation.
What’s more, almost a third of those surveyed said they think they’ll pay less than they do now.
It’s a common misconception that falling inflation equates to falling prices. But the two don’t always go hand in hand."

I'm not convinced we will see food deflation either.

I think this would only happen if people buying habits so much and there was wriggle room in the profit margin.

Like branded beans are so much more expensive than supermarket own i could see them dropping but i cant see supermarket own brand dropping.

But if deflation is falling prices then we're already seeing it with both Morrisons and Ocado reducing prices. Unless their reduced prices is the scam where they bump the prices up for a week and then "reduce" them so they can say they have.

This is worthy of a thread on its own

Survation | Public conflate 'halving inflation' with declining price levels | Survation

The poll from Survation on what people understand by inflation - which shows people don't understand it - and what halving it means

As an example, wheat prices peaked in q1 2022 - they are now down about 25%.

Others not so much, but a bit like fuel, it took a bit of intervention before fuel prices at the pump got adjusted to something akin to their wholesale pricing.

There’s some awfull profiteering going on. I was with a Civil Servant last week, and they shared that they are looking at windfall taxes on some of the larger food producers who are profiteering.

I suppose it depends on what it cost versus a year ago.

If it cost £1 last year, £1.50 in March and £1.20 now, then food inflation is 20% compared to this time last year.

Still more expensive than last year but cheaper than in March.

Lots of supermarkets 'risk priced' items as everything was so unknown alongside the actual rises in cost of production etc. Now things are starting to stabilise a bit they can remove the risk pricing they added on top of the actual rises as we are seeing, I've noticed quite substantial falls in price in some shops (albeit still higher than they were a few years back which is fair enough due to actual rises). There's definitely been profiteering too.

I think a big problem is inflation is just the rate at which prices are rising. They’re still rising at a much higher rate that wages are.
people are struggling so the conservatives want to be seen as doing something but on reality they can do jack all

We won't. The reason prices are so high in the UK is that we have to import everything, more importantly, we are taxed to death, everything you by in a shop costs 20% more than it needs to because we pay tax on it. So prices could immediately be 20% less, that's a hell of a saving.

Are you all aware that our government literally gives away, and I mean gives away, 15 billion pounds of our money each and every single year on Foreign Aid?

Even worse, nobody in government can say what this money is used for once it's handed over.

To put that into perspective, it would be enough to give every single person in the UK, every man, woman and child, £250 a year, every year. Or £1000 a year for a family of four. That 1k would buy a lot of food. And our useless gaggle of rich politicians could do this without raising a single penny in extra taxes, and they could do it every single year. But instead of helping us, when there is genuine need, they would rather take our money and give it away.

Shit like that is why prices will never come down in the UK.

Yes we rely on imports too much. And locally they’re trying to turn thousands of acres of prime agricultural land into solar panel farms. It’s a disgrace. Not just due to us not being self sufficient as a country but also because of the ecological impact.

We left the EU, we are an island so to bring food in is expensive, not much spare land therefore we must invest in feeding our own population and become more self sufficient. It is ridiculous that farmers have to diversify to make a living, that crops are rotting in fields. We also have to get back to basics with our diet, eat more seasonally and not eat an American type diet with all its sugar etc.

But it'll take quite a while for falling gas prices to result in cheaper fertiliser, and in turn for that cheaper fertiliser to be used to grow cheaper food.

Food prices were unsustainably cheap in the UK anyway. Farmers have been struggling to make ends meet for a long time.

There was one a week or so back about how many people don't understand inflation.

You are aware that there is no VAT on almost all food?

"The reason prices are so high in the UK is that we have to import everything".

This is incorrect. We do not "import everything". In the case of food it depends how you measure it, but if you want to take a pessimistic view approximately 50% of our food is home grown. In some foodstuffs like wheat we are pretty much self sufficient. In others like fruit we import a significant amount :

https://www.gov.uk/government/statistics/united-kingdom-food-security-report-2021/united-kingdom-food-security-report-2021-theme-2-uk-food-supply-sources

"The UK currently produces about 60% of its domestic food consumption by economic value, part of which is exported. This means just under half of the actual food on plates is produced in the UK, including the majority of grains, meat, dairy, and eggs. This figure would be higher without exports. UK supply comprises domestic production excluding exports, plus imported food. The production to supply ratio, important for understanding the UK’s self-sufficiency, has remained stable over the last two decades, and for crops that can be commercially grown in the UK has been around 75%."

One of reasons we import a lot is because we want to eat a lot of food that cannot be grown here, and also we want 100% availability rather than seasonal.

As for food inflation, I think there are several factors. One is energy costs. The cost of food production is very dependent on energy. Energy is used to prepare the ground, grow the food, harvest the food, transport the food to the end user. For growing energy is used to make fertilizer. The other is situations like the war in Ukraine, which produces a lot of food. The production there is decreased and therefore there is more competition in the market for the produce. I also think Russia is a big producer of fertilizer. It's possible that people believe the inflation will decrease going forwards because they have some insight into the above (ie they believe energy prices will decrease and that will feed into food prices).

Have I missed the government calling in the bosses of the energy and fuel companies and asking them when they're going to cut their massive profits?

Because paying for energy standing charges on a daily basis even if you're not using any is fucking daylight robbery.

As a dairy farmer I'm livid that the price I get paid for milk has fallen by 33% since the start of the year. Our electricity and fuel bills haven't fallen, the feed bill is just starting to go down, but not by much.

The price we receive is now lower than the cost of production, so most dairy farmers are paying to produce milk and clinging on praying that the price will go up.

Not sure that the electrical and gas grid pops in and out of existence depending on whether I use it.

Maybe they could invent some sort of portable substation that I can phone them up and they can deliver on a truck when I need some leccy and take it away when I'm not using it.

This is worthy of a thread on its own It had a thread of its own a few days ago.

https://www.mumsnet.com/talk/am_i_being_unreasonable/4832319-nearly-two-thirds-of-the-population-think-that-if-inflation-is-halved-the-price-of-goods-will-go-down?page=3&reply=127056593

Some food producers have been talking about profiteering by the supermarkets for a while, so it's might not be unreasonable to question why, if (and I emphasise IF) the mark ups have been unnecessarily high, and also IF costs to the retailers have reduced, that isn't being reflected by the shelf prices. But I guess we will see what is said in committee today.

Separate issue to the lack of understanding (not helped by the way the govt, or indeed media, who don't appear to try much to correct this) about how a slowing rate of inflation still means things get more expensive - just on a less abrupt trajectory.