The economic causes of the cost of living crisis

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Talking of blatant profiteering...

Pret ramps up prices as gross profits climb 83%

The price of an egg mayo sandwich is up 72% since 2020, compared to CPI inflation of 20% over the same period

www.standard.co.uk

More evidence. Disgusting price rises.

The price problem with Pret

Expensive sandwiches are flawed economic indicators

www.ft.com

 

[CNT36]

More evidence. Disgusting price rises.

The price problem with Pret

Expensive sandwiches are flawed economic indicators

www.ft.com

I wouldn't be surprised if this was partially a deliberate strategy on the part of pret. The club Pret thing is on the surface a good deal. 5 drinks a day for a month plus 20% off everything. The drinks are definitely not worth the listed price and compared to other places they taste cheaper. Those food prices will be marked up with members paying less but a still inflated price. Get people through the door with a reasonable offer on drinks and sell them sandwiches with a discount by smoke and mirrors. Sounds like a winner.

 

[yield]

The Myth of Global Grain Shortages
24 August 2023 By Jayati Ghosh

Contrary to popular belief, the war in Ukraine has not led to a global shortage of wheat. While global hunger has surged in recent years, the way to address the current food crisis is by focusing on its real causes: financial speculation and corporate profiteering.

NEW DELHI – In recent years, soaring food prices and the growing frequency and intensity of floods, droughts, and other extreme weather events have prompted warnings of a looming grain shortage, potentially spelling disaster for the world’s poorest and most vulnerable populations. Although climate change poses the greatest medium to long-term threat to global food security, Russia’s invasion of Ukraine is frequently cited as the immediate cause of the current hunger crisis. But this is a red herring.

To be sure, the war has disrupted wheat exports from both Russia and Ukraine, two of the world’s leading producers, throwing critical trade relationships into disarray. Given that Ukraine and Russia previously accounted for more than a quarter of global wheat exports, policymakers and commentators attributed the surge in prices in early 2022 largely to supply shortages caused by the conflict.

But while the global wheat price index rose by around 23% in the months following Russia’s invasion, prices began to drop in June 2022. By December, they had returned to pre-war levels. Even when acknowledged, this trend was attributed to the success of the Black Sea Grain Initiative (BSGI), a United Nations-backed agreement that lifted the Russian blockade of Ukraine’s grain exports. Conversely, Russia’s recent decision to pull out of the deal has raised concerns about its potential effects on the global grain trade.

These concerns are misguided for two reasons. First, the global wheat supply (both total production and the traded amount) has remained steady since the onset of the Ukraine war. The Agricultural Market Information System, administered by the Food and Agriculture Organization of the United Nations, incorporates data from the International Grains Council to provide estimates of supply, usage, and trade. Between July 2021 and June 2022 – a period when wheat prices peaked – global production rose by five million tons while trade volumes increased by three million tons. Over the same period, stocks rose slightly (by three million tons).

Most notably, the total wheat supply (defined as production plus opening stocks) exceeded utilization by as much as 275 million tons. This surplus challenges the prevailing narrative of a global shortage. Similarly, global supply is estimated to have exceeded demand between July 2022 and June 2023, suggesting a consistent trend.

Second, governments and the media tend to emphasize specific regional shortages while overlooking increases in production and trade in other parts of the world. In reality, wheat is produced globally, which means that shortages in one region could be offset by increased production in another.

See also the thread from 2010 - Commodities traders caused starvation and malnutrition for 200 million people

 

[Rob Ray]

We need to get ready to navigate "dynamic/surge pricing" in all aspects of life, according to the FT. Back in the day it used to be known as "price gouging when people didn't have any other options" but hey, slap a sexier label on in and we're all good I guess.

The rise of surge pricing: ‘It will eventually be everywhere’

Powered by algorithms and AI, a growing number of consumer industries are adjusting prices in response to supply and demand

www.ft.com

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archive.ph

while retailers in the US have embedded dynamic pricing into their operations more widely, Europe still lags behind, according to Pini Mandel, chief executive of Israel-based Quicklizard, whose dynamic pricing tools are used by the likes of Ikea and Sephora.

More than half of retailers use it in the Nordic countries, about 40 per cent in Germany, Austria and Switzerland, but only 15 to 20 per cent in the UK, according to Mandel. “Inflation is the reason why the UK, which is the most conservative market when it comes to dynamic pricing, is also joining the revolution,” he adds.

The marketing bods are pitching it as dynamic "discounting" - even though the actual system is to charge the previous price during "non peak" hours and extra at peak, to enable a pretence that it's not an inflation of cost.

“If my pub goes out and says, ‘Before 7pm, we’re serving drinks 25 per cent off’, nobody objects to that,” says Moore. “In general, it’s better to market it as a discount off prime rather than an increase on prime.”