Macroeconomics: UK economy, IB Economics

Another reminder that food price inflation is still with us, and keeping inflation high, with coffee and chocolate among those foodstuffs most likely to see increases in price. The overall rate of inflation at grocers is around 9%, and until that starts to drop, then core inflation is going to remain high too. 

Aha! I've not had a shrinkflation 'scoop' in quite a while, but Mondelez have obliged by announcing that multipacks of Cadbury's confectionary are going to contain smaller bars. 

The company claim that the move is part of a strategy to help tackle obseity, but it's hard to believe that a group responsible for manufacturing confectionary really has this at heart. The price of the packs are, of course, remaining unchanged, and consumers have been quick to suggest that protecting profits is at the heart of the change. 

I couldn't comment - but I'm sure that socially responsible companies, like Mondelez, always bear in mind the external costs associated with the consumption of their products. Ha, ha, ha.

The Guardian looks at shrinkflation with more detail about how firms are trying to offset rising costs and high street competition. It's a good read - focusing on reductions in the number of fish fingers in a packet, the size of chocolate bars.

That said, the extent to which this has happened is limited, as the article notes: "The ONS estimated that only between 1% and 2.1% of food products in its sample had shrunk in size. It also only gathered details on the size and weight of about half of the 37,408 food and drink items in collected price data on a monthly basis."

Costs of Brexit anyone? The first data set for monthly exports of good to the EU is in and there have been precipitous decline in food and drink exports, notably whisky, cheese and chocolate. All of which must mean that John Redwood's diet is getting somewhat samey, given that he seems to think that if Europeans aren't buying our produce we should buy more of it. 

Does he not appreciate that we've not bought it previously because we don't want it, and that if we don't want it at a higher price, it generally doesn't mean that there's going to be significant increase in quantity demanded at a lower price. 

And low inflation too - despite the rising price of chocolate and holidays. The UK economy really is a curious beast - near-stagnant growth, record levels of employment/low unemployment and low inflation. 

It is difficult to discern what's going on.

Let's get the important issues dealt with first. This clip looks at the possible impact of Brexit on a small chocolate company. THey can't stockpile to the extent that large firms can, and anyway many of their raw materials would go off, so what are the alternatives? Going abroad.