Macroeconomics: UK economy, IB Economics

Another good sign, with food price inflation slowing to 4.5%, and some interesting numbers from the supermarket sector, with Lidl still the fastest growing supermarket, emphasising how the discounters are doing well at a time of economic uncertainty. 

This BBC article compares the price of basic items in supermarkets, trying to see how British prices compare with those on the continent. It highlights the facts that some goods are more expensive and others less expensive. The interesting thing is in drilling down into why this is the case.

Brexit would be too convenient a cause - however, it is clearly the case that it will play some part in this. However, the article makes it clear that individual market conditions are the most important factor, notably the level of competition and the extent to which the goods are imported. 

An interesting perspective on inflation emerged yesterday, with the Governor of the Bank of England suggesting that firms increasing their prices has been one of the major drivers of inflation, and that if they could hold off further increases this would help bring inflation down. 

He's already asked for workers to moderate wage claims, and other argue that the real driver of inflation has been firms increasing their profit margins. So which of these factors are responsible for sustaining inflation in the UK? Factor in the impact of Brexit, in reducing the level of competition faced by UK-based businesses in the absence of EU rivals, and there are clearly a number of things sustaining inflation and inflationary expectations.  

So much for coherent policymaking, as the Brexit Opportunities minister, Jacob Rees-Mogg, has announced that Britain has no immediate plans to introduce Brexit import checks. Ports that have already implemented plans and built infrastructure must be delighted. 

In short, my cynical take is that EU importers will find it easier to export to the UK, whereas UK exporters will still face checks on exports to the EU. As the article notes "some UK food exporters face the triple whammy of marathon length haulage queues in Kent, dozens of pages of red tape for sales in Europe, and no equivalent restrictions on competition from abroad for the UK market." They must be delighted. 

The minister must, however, surely want to explain why we're delighted that Brexit has offered us the opportunity to revert to the pre-Brexit state of affairs.  

The British Retail Consortium are predicting price rises this autumn as a number of factors feed into rising prices for consumers, notably higher food prices, rising shipping costs and the continued effects of Brexit. They also argue that at the moment, high levels of competition between supermarkets is helping keep prices low. 

The latest data from the British Retail Consortium has highlighted the fact that competition between supermarkets has driven food price inflation down to its lowest level for nearly two years, potentially helping inflation fall. 

Is UK inflation stickier than elsewhere? Faisal Islam investigates, suggesting that mobile phone contracts and food prices are higher than in Europe, and has the temerity to suggest that some markets in the UK are less competitive than the equivalent markets in the EU because of a lack of cross-border competition. 

I can't quite put my finger on what it might be that's causing this, however...

Jasper Jolly's article highlights the recent history of Jaguar Land Rover, noting that the car industry, in particular, the electric car industry seems to have fallen further behind its competitors in the EU and the US. 

They argue that the company has full order books, not as a result of high levels of demand, but its inability to meet that demand and the slow move towards zero emissions cars. Unlike some of its rivals, it simply doesn't have the scale to rival other manufacturers. 

Tomorrow's Guardian editorial is going to focus on the implications of rising fuel prices for the poorest in society, and argue that there's a need for government intervention to protect the most vulnerable.

What appears to be obvious is that the next few months are going to see a rise in fuel poverty, and the government really needs to decide how to plot a way forward and reset the market. With so many suppliers having left, there is limited to no competition at present, and in the longer-term that is likely to be damaging to consumer interests.