When Does Inflation Hit? Bank Holiday Post

Returning from a Bank Hol run on the supermarket, I cannot but notice that the much-heralded inflation (as anticipated by myself, amongst many others) has not yet hit food prices - at least, not the stuff Mrs D and I buy, across a wide range of foodstuffs and drinks.  Not even the stuff coated in sunflower oil.

We are given to believe supply chains are heavily oriented towards just-in-time, which speaks against there being many months of last year's produce stashed in Mr Tesco's warehouse, being steadily run down.  The warehouses of his suppliers?  Some of what's in our trolley is fresh produce.

And everything requires transportation: do supply-chain players buy their fuel many months forward?  I'd believe they fixed their electricity and gas prices around this time last year, which was when every energy professional knew the price crisis was coming, Ukraine or no Ukraine.  But diesel?  Ships' bunkers?  Maybe.

Or is everyone determined to take the hit in their P&L?  Is it even a "passive price war"?

All in all, I'm surprised.  When does the absence of wheat (& sunflower) exports from Ukraine - and Russia - make itself felt?  When do supply-chain players run out of forward-purchased energy?  

When does food inflation hit?

ND

PS:  Food aside, I'm not sure I've encountered the full out-working of >6% CPI generally, either ...

PPS:  Food price inflation has gone through the roof in, errrr, Russia ...  One of our new trolls can now assert this is CIA propaganda if they like, but, hey-ho, it's true. 

A welcome back to Brexit and an EU sausage story

 Om my how much Covid-19 changed the world. For five years, the UK national conversation was nothing but the screeches of Brexit from all sides and endless comment and opinion pieces (I offer no defence, m'lud). Covid put a stop to all of that, we have heard little of Brexit since it was done.

Pre-dating even that, were the horror stories, originally more or less invented by one B. Johnson when the Telegraph's EU correspondent, about 'bendy bananas' and other such hilarious single market rules and regulations. This was a 20 year feast for British newspapers so to speak. 

And lo, here we are in 2021 and we get a perfect marrying of the two old trends. Firstly, the Northern Ireland compromise, never really a compromise and designed solely to get Brexit done as per instructions from the British electorate is coming unstuck. The EU have decided that the main reason for this is the importation of British sausages (and mince) to Northern Ireland that now require health certificates for Export to the EU - certificates which, um, don't exist in the EU.

This has long been a simmering issue and it a classic of its kind. The UK, on doing Brexit, knew there was this risk as the Industry bodies have highlighted it for ages. In a typical fudge, the UK extended a grace period whilst negotiations were ongoing. However, the EU does not have to budge and it has not. It will simply insist Northern Ireland imports from Ireland and the EU itself - after all that is the point of their closed single market! The Eu commissioner is wallowing in joy at being seen to be fair, yet beastly to the Brits. 

Meanwhile, the UK side can't believe the EU will be so intransigent and ignore all efforts to make exceptions for the UK. Lord Frost in particular, can't seem to understand the EU does not care about playing fair and sees the UK as a third country. 

In fact, the situation is about to get worse,  as for less high-risk meats such as frozen produce, the non-EU country of origin must be authorised for imports into the EU, and establishments that produce the meat must also be approved to follow EU standards. The UK has yet to be listed as such a country, which is cause of concern to British meat producers, some of which are heavily reliant on exports to the EU.

Brexit is back and back for good, I hope no one thought it would ever go away. Perhaps at the G7 meeting compromise will be reached, but it seems unlikely, the EU is being very tough, but is on solid legal ground on these issues and as we know, has past form for insisting on bizarre terms for food import and export.