Afternoon summary
Time for a recap.
The chief economist of the Bank of England has declared that businesses and households should “accept that they’re worse off” due to the surge in energy prices.
Huw Pill told an economics podcast that a ‘pass the parcel’ game, in which people try to pass on the impact of inflation by seeking wage increases or lifting their prices, was driving the cost of living higher.
As Pill put it:
So somehow in the UK, someone needs to accept that they’re worse off and stop trying to maintain their real spending power by bidding up prices, whether higher wages or passing the energy costs through onto customers.
And what we’re facing now is that reluctance to accept that, yes, we’re all worse off, and we all have to take our share.
More here:
Several of the world’s best-known consumer goods firms have revealed how price increases have boosted their sales this year.
Nestlé, the Nespresso and Kit Kat maker, lifted its prices by 9.8% in the first quarter of this year, close to the fastest pace in more than three decades. It suffered little sales damage, with volumes down just 0.5% as consumer stumped up more for Nestlé’s food, drink and petfood.
McDonald’s benefitted from a price hike on its menus – such as pricier cheeseburgers – it reported that sales are up 12.6% compared with a year ago
And Pepsico, the drinks, food and snacks group, hiked its prices by 16%, which only pushed down its sales volumes by 2%.
These prices increases are hitting households. Data firm Kantar reports that grocery prices have risen by 17.3% over the last 12 months, a slight slowdown.
Fraser McKevitt, the head of retail and consumer insight at Kantar, warned it was “too early” to say grocery inflation had peaked.
“We’ve been here before when the rate fell at the end of 2022, only for it to rise again over the first quarter of this year.”
Bank of England deputy governor Ben Broadbent argued today that the Bank’s quantitative easing stimulus programme was not to blame for fuelling inflation, by boosting the money supply. Instead, he said, supply chain disruption and high energy prices were responsible.
Broadbent also predicted that inflation could be turning lower.
Here are the rest of today’s main stories:
OK, Huw Pill, tell us about how you've accepted being worse off. The problem isn't that British people need to accept they're poorer, it's that they've been accepting declining standards for such a long time now. They should *stop* accepting it. https://t.co/8nMnBEtzG2
— Sarah Fairman @[email protected] (@SarahLFairman) April 25, 2023
