Inflation is still an issue for the domestic economy. Headline UK consumer price growth has now stayed above 9 per cent for a full year. But the debate about its drivers is starting to change. If last year was all about energy prices, this year the focus is increasingly on the cost of food. Food prices rose 19.1 per cent in the year to March.
Both energy and food costs have their origins, to a degree, in the war in Ukraine. But perceptions matter, and if the energy spikes of 2022 felt to many like they were unavoidable – and resolvable only by government intervention – soaring food prices have led to a renewed focus on company behaviour.
The criticism is that companies are using the cover of macroeconomic problems to increase prices further and take a bit more for themselves. Consumers, aware of the war, supply chain challenges, and other headwinds, begrudgingly feel these increases are understandable and so don’t abandon products in their droves. Greedflation is one term for it, ‘excuse-flation’ another. These portmanteaus don’t roll off the tongue but they have spread rapidly. After months of warning of wage-price spirals, both the European Central Bank and to a lesser extent the Bank of England have this year begun muttering about companies’ potential role in making price growth stickier.