The first is that the Bank of England takes this fact into account when appraising inflation expectations. If food prices are supposedly now driving inflation, then it is entirely reasonable to expect that inflation will fall significantly and soon precisely because of the decline in bulk food prices. Why is that possibility not being discussed?
Median wage is now some £640 a week. Median household food budget perhaps £60 a week. Food is 10% of incomes therefore (around and about). So, a 10% change in food prices would be perhaps 1% on the general inflation rate.
Difficult to see food as the major driver of the inflation rate really….
Also, somone who knew economics would know that the rate being worried about is the core inflation rate. Which is the one that excludes food and fuel….
Core inflation, eh?
Which also just happens to exclude tax rises, parking fees & fines, opportunity cost of long NHS waiting lists, lengthening planning delays, time wasted navigating 15 minute cities…
Median households are not spending £60 a week on food. Unless they are single blokes. We spend £300+ (2 large boys, 1 girl. 2 adult) but are not price sensitive. £60 a head maybe.
In which case adjust the household food figure for the median number of household members. More like 15-25% of income. And is that median figure post tax?
From ONS:
Households spent an average of £481.50 per week in the year to March 2021. Similar to previous years, households spent the highest proportion of their total expenditure on housing, fuel and power (18%), food and non-alcoholic drinks (14%)
14% of £480 – £67
£60 a head maybe
Your supermarket spend is not your food spend. When I take out cat food, wine, cleaning products etc out of our supermarket bill, the remainder is pretty small.
£60 a head maybe would mean my wife and I would spend nearly £20 every meal on ingredients. That is clearly ludicrously high, and we are not budget conscious.
I’ve always found it ironic that “core inflation” excludes food & fuel. Just happen to be 2 of the biggest & most important items for most people. Leads to a wee bit of cognitive dissonance – “inflation is under control luv” (as long as you don’t need food, petrol or heating oil).
Entirely true. They’re also the two things that vary wildly – both up and down. So looking at what’s happening to hte general price level without them can be useful.