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Different baskets? February 12, 2013

Posted by WorldbyStorm in Economy.
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Seeing as we’re discussing food, what to make of this? The Irish Times notes that:

Politicians have repeatedly claimed that falling grocery prices have helped offset higher taxes and falling wages, but a new survey suggests the opposite has happened.

And it continues:

The price of a typical basket of groceries, made up of staples including bread, milk, sugar and tea, has increased by more than 12 per cent in less than two years, with some products increasing in price by almost 40 per cent, the Consumer Association of Ireland survey shows. The association has regularly tracked prices of a set list of commonly bought groceries for more than a decade and has found that 16 of 19 products it priced last month had risen in price by between 5.5 per cent and 38 per cent in 20

Of course this is a limited sampling – both the CPI and the HICP have a vastly more varied scope (perhaps too much so, given that the CPI includes building materials, mortgage interest, etc), but it is one of grocery prices including staples and in that sense it gives an insight into day to day or week to week costs.

According to a report last month in the Irish Times the CPI suggested that:

The price level in 2012 remained below 2008 levels owing to sharp falls in prices during the worst of the recession.
This is the first time since the mid-1930s that prices have not risen over a four-year period.

And:

Comparing the full year with 2011, consumer prices rose by 1.7 per cent. This was lower than the full-year change between 2010 and 2011, which stood at 2.6 per cent.

On an anecdotal level, and admittedly purely subjectively, I’d think that the cost of the weekly shopping bill for me has increased by perhaps ten per can or so across the last year and a half. I’d suspect that is actually greater in the smaller mini-supermarkets, like Centra etc. What do others think?

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Comments»

1. crocodile - February 12, 2013

Supermarkets have no obligation to disclose their Irish trading figures. We have no way of knowing their margins here.
Simple, says the free marketeer: don’t shop there if you’re not satisfied.
Simple, says the advocate of regulation: consumers can’t really make a free choice unless they have all the data at their disposal.
It’s as clear-cut an example as I can think of, of why the free-market case is morally wrong: those with least financial power, least capacity to ‘shop around’, are those who are gouged hardest. It’s no coincidence that it’s the staples that have risen most in price.

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WorldbyStorm - February 12, 2013

“It’s as clear-cut an example as I can think of, of why the free-market case is morally wrong: those with least financial power, least capacity to ‘shop around’, are those who are gouged hardest.”

+1

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WorldbyStorm - February 12, 2013

By the way, there was some stick online for the Consumer Association for choosing such a limited basket but I think that it’s fair enough to examine costs of staples, as you say, no coincidence those prices are rising.

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LeftAtTheCross - February 13, 2013

Probably worth pointing out that the price gouging isn’t all done by the shopkeepers either. The wholesale supply industry which delivers stuff into their shops is a monopoly and proces are set accordingly.

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2. LeftAtTheCross - February 12, 2013

I’d say our grocery bill has abput halved in the last year since we stopped doing the weekly shop in Tesco and moved to Aldi. We’re a family of 5 incl. a teenage lad so there’s a fair amount of food eventually ending up in the septic tank every week.

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WorldbyStorm - February 12, 2013

It’s amazing. Aldi and Lidl do make an huge difference. One thing that strikes me about them is that given they tend to have much much fewer different brands of the same products they’re curiously like some sort of high finish Soviet shops.

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CMK - February 12, 2013

Don’t like them. I don’t think they’re unionised and they are reputed to have some seriously dodgy work practices, particularly for female workers.

If you aggregate the costs of the bailout that are not taken directly from wages and salaries in the form of taxes, levies and the USC, there are hundreds and probably thousands of euro going out every year from all households. Take insurance, for instance. If you’ve car and home insurance you’re paying the ‘Quinn Tax’ of 4% on every policy which would be up to 100 euro. Then you have the carbon taxes on utility bills. All of this before we get to taxes for property and water.

Then we have food, the most basic necessity, increasing year on year in a context where wages are declining in real and absolute terms. At a union meeting recently and given a review of situation from an organiser: every single employer the organiser dealt with was looking for at least 10% reductions in pay and some were looking for 15%. And these are workplaces where the average industrial wage would be the pinnacle of peoples’ earning power.

Politically this is not tenable – the Ruairi Quinn ‘go shop in Aldi’ – approach can only go so far but not everyone has one of these stores nearby and, when you do get there, the range isn’t great. It will be interesting to see if this news elicits any political reaction. I suspect it’ll be radio silence from the government and its apologists in the media as discussion of this development, in the current context, can lead in one direction: which is to question the fundamental sustainability of austerity. If, as is clearly the case, austerity is programmed for at least the next 15 and possibly 20 years and, if you can imagine a X and Y axis chart, wages are declining and taxes, prices and charges increasing. There’ll come a point where huge swathes of people will not be able to manage even the semblance of a decent life – we’re getting there fast if the Irish League of Credit Unions are to be believed. This news is another indicator which questions the political sustainability of austerity. And, if austerity has an alternative, what is it?

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WorldbyStorm - February 12, 2013

That concerns me too re Aldi and Lidl. Some ‘interesting’ reports from the continent. I think that’s a fair point too re access, where I live there’s no supermarket at all. Sure, one can go into the city centre, but that’s a journey in itself. Easy for RQ to make glib pronouncements like that.

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CMK - February 12, 2013

I remember bursting out laughing when I heard Ruairi Quinn tell one of the radio presenters that he shopped in Aldi, in the context of a discussion on food prices (this was pre-2011). Just didn’t ring true. Supermarket access is a big issue, particularly with the development of out of town retail parks and malls which don’t have the necessary transport links to facilitate access and are predicated on universal car ownership. Car ownership of itself becoming a major economic issue for many households, too.

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LeftAtTheCross - February 13, 2013

I shoul dclarufy I didn’t intend to do a Harney / QUinn on this and tell people to shop around for better value on groceries, I was merely recounteing our personal experience since Aldi opened in Navan a year or two ago.

The point made about car ownership is true, out here in the country you’re either a car owner or you’re stuck at home with a couple of buses a day into town and back, and there’s no way you could do a weekly shop by bus.

Then there’s the local Mace or Centra in either of the two nearby villages, a 45 minute there and longer back if you’re weighed down with shopping. We only use our local shop for emergency stuff and it’s grand for fruit and vegtables and meat, but your money wouldn;t go far there is you were doing a full shop.

Your city folk have it easy you know. Ok, maybe we should be growing our own out here, but you’d be hard pressed to grow weetabix and marmalade and milk etc…

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Ghandi - February 13, 2013

Ah WBS just for you the new Aldi or Lidl whichever will be viewable from your front window and opening mid 2013.

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WorldbyStorm - February 13, 2013

And you, almost!

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LeftAtTheCross - February 13, 2013

“they tend to have much much fewer different brands of the same products”

Not a bad thing by any means.

Capitalism requires over production and the hugely wasteful effort involved in advertising and marketing, which consumes a significant percentage of the ‘costs of production’ of these consumable commodities.

There’s an element of personal vanity involved in the “I prefer this brand to that” type of choice-based consumerism. For the common good it might indeed be better if the choice was limited and the market taken out of the supply chain for the basic necessities of life.

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3. CL - February 12, 2013

‘Speculating on food prices saw investment banking firm Goldman Sachs pocket more than one billion pounds in 2012, reigniting the controversy surrounding banks profiting from the global food crisis.’

http://www.foodmag.com.au/news/goldman-saches-accused-of-profiting-from-food-cris

Some groups are just higher on the food chain than others.

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4. Dr.Nightdub - February 13, 2013

There’s one important point which isn’t mentioned in the Irish Times report: while “notional” prices of groceries have undoubtedly gone up over the last year, a much higher % of them than before are being sold on special offers. The Consumer Association doesn’t clarify whether it screens out items that are on special offer, I’d imagine they have to otherwise something that’s on a buy one get one free offer this week is gonna look like it only costs half of what it did last week.

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WorldbyStorm - February 13, 2013

Yep CAI does screen out special offers but is that good or bad?

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5. Pidge (@Pidge) - February 13, 2013

The CSO also break down the CPI into constituent parts, so you can make a reasonable comparison on a specific set of items. If memory serves, they also do direct field research (actually going into shops), and have decent statistical qualifications and transparent methods.

I don’t see any of that with the CAI, which has a mission beyond statistical accuracy. Don’t think it’s worth much note, to be honest. The IT article reads like a slightly rewritten press release to me.

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WorldbyStorm - February 13, 2013

Fair points, and I think I noted the caveats applying in the OP. that said the CPI does seem extraordinarily broad, even in its food subsection, check out Appendix Three, and the CAI report perhaps a fraction more robust than might otherwise be thought, a least to judge from this. http://static.rasset.ie/documents/news/cai-supermarket-basket-survey.pdf

http://www.cso.ie/en/media/csoie/surveysandmethodologies/documents/pdfdocs/CPI_Intro_of_Updated_Series_

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Ciaran - February 13, 2013

“The IT reads like a slightly rewritten press release to me.”

Fixed your post for you, Pidge (@Pidge).

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6. Tawdy - February 13, 2013

Out of necessity we shop in Lidl or Aldi, they do have a very good range of stuff. We top up at the nearest Dunnes. The difference in prices amongst the range of goods bought in the first two and Dunnes is quite staggering.

Until things change for the better we will stick with the lowest costing Lidl & Aldi.

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