Food Inflation in UK

Armstrong Economics posted that Bank of England is cutting interest rates despite rising inflation, especially of food prices. The BoE tried to put that on employee costs of the supermarkets.

I have an alternative explanation. Inflation in classical sense is a short for inflation of money supply. BoE apparently worries that lowering interest rates will make lending cheaper leading to increase in money supply, i.e. classical inflation. However, the market prices actually depend on supply and demand. When supplies are low but demand high, prices rise to what the wealthiest market segment can pay for it, whereas if supplies are plentiful, nobody will take the product even for free. Also, the value of British pound had fallen by 4% on July, while the food price inflation was 4% – coincidence?

I think the inflation pressures on UK food prices are due to combination of increased demand (according to Worldometer, last year UK had 0.4 million more people on the top of 69 million already there, and that is on the top of the growth from the previous years) and reduced supply. The Western countries have reduced food production for environmental reasons, whereas political instability and weather have reduced crop production and / or exports elsewhere. Ant then there are artificial trade barriers and monopsonistic practices of the Western food and agri conglomerates (and Western in this case includes Japan and their rice crisis), which have created artificial scarcities to maintain the high prices.

All in all, I don’t blame the greedy Tesco cashier for the possible ham or bacon price increases in UK. I think it is the lack of pork anywhere except in government budgets.