jetpack domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /mnt/stor08-wc1-ord1/694335/916773/www.tvhe.co.nz/web/content/wp-includes/functions.php on line 6131updraftplus domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /mnt/stor08-wc1-ord1/694335/916773/www.tvhe.co.nz/web/content/wp-includes/functions.php on line 6131avia_framework domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /mnt/stor08-wc1-ord1/694335/916773/www.tvhe.co.nz/web/content/wp-includes/functions.php on line 6131I don’t think many people realise how much power supermarkets have over there supply chain – I’m sure that the situation you face in the UK is just the same as the situation here.
The strange thing we see in this situation though is that the whole increase in cost pressures for wholesalers get passed on to the supermarket, and then passed on to consumers.
This is because the supermarket extracts all the surplus from the trade with their wholesalers – implying that wholesalers only “break-even”. If costs rise, then the break-even point increases by the same amount – implying the supermarkets have to pay the whole increase in costs or the wholesalers will just leave the market. As a result, the current data shows that the price wholesalers are charging has risen strongly – which leads people to the conclusion that wholesalers are the ones in charge when they are not.
]]>If we view the Australian and New Zealand supermarket industries are two separate markets then the story you have linked to is not too important. Given that incomes are higher in Australia, then it makes sense that food prices will be higher – irrespective of the level of competition in the markets.
When thinking in a general “inflation” context, it is important to separate true inflation out from relative price movements. If a lack of competition leads to more of the burden of wholesale food price changes falling on consumers, then the relative price of food, from the consumers perspective, will change by a larger amount.
If we believe that higher relative prices for goods such as fuel and food suppress domestic demand, then we might be able to state that a lack of competition in the supermarket industry reduces “inflationary pressures”.
However, if this is the case it is a pyrrhic victory – as the lack of competition causes greater volatility in the price level anyway 🙂
As a result, I believe that the anti-competitive view of any change in supermarket policy is the key thing to keep an eye on.
]]>Woolworths, or more accurately a lack of competition in the supermarket area, could be at least partly to blame for Australia’s comparatively high food inflation.
See this story:
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