Milk markups at UK retailers have hit a 30-year high

Milk spreads at UK retailers have hit a 30-year high, indicating that companies have used the recent surge in inflation to smooth out profit margins on consumer goods.

For decades, the retail price of half a liter of milk was 25-30 pence higher than the farm price. However, according to data from the National Statistics Office and the Agricultural and Horticultural Development Office, by March this year it had climbed to 44 pence.

Line chart of average UK retail price of milk minus producer price (penny per pint) showing the UK milk markup

Competition in the UK supermarket sector is generally cutthroat, so the increased mark-ups suggest consumers are getting more used to high inflation, economists said.

Paul Donovan, chief economist at UBS Wealth Management, called it a prime example of “profit-driven inflation” — when consumers hear so many stories about rising costs that they accept even more price increases as fair.

But UK officials don’t think this kind of “greed” is widespread and doesn’t explain the overall pattern of high inflation. Excluding energy, British companies’ profits as a percentage of GDP last year were the lowest since 2009. Competition authorities say they have no evidence of specific concerns in the food sector.

Retailers’ margins often get squeezed again when consumers question whether price increases are fair, Donovan said. There are some signs that this may have started in the UK milk trade: last month, major supermarkets began to cut their milk prices.

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Delphine Strauss

More of our weekly charts. . .

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According to data from the Peterson Institute for International Economics (PIIE), US multinational corporations offshore most of their profits to low-tax jurisdictions.

In seven of the 10 most popular offshoring locations, the effective corporate tax rate was below 10 percent. These countries accounted for more than half of US companies’ foreign profits in 2019, up from about 30 percent in 2000.

US policy encourages offshoring because foreign assets are taxed at a lower rate than domestic assets witness to the United States Senate Committee by Kimberly Clausing, professor of tax law and policy at the University of California.

The OECD is seeking to introduce a global minimum corporate tax rate, but the agreement originally reached between 136 countries in 2021 has not been implemented because of insufficient support in the US Senate.

Amy Borrett

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Americans are losing confidence in key economic leaders as their country faces a deadline to raise the government’s debt limit and a potential economic recession.

Just 36 percent of Americans polled by Gallup said they have a lot or quite a bit of confidence in Federal Reserve Chairman Jay Powell to do or recommend the right thing for the U.S. economy — the lowest level of trust in a Fed chair for more. than 20 years.

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Confidence in President Joe Biden and Treasury Secretary Janet Yellen has also declined over the past year, Gallup found.

Federica Cocco

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According to the BP Statistical Review of World Energy, last year the Netherlands generated twice as much energy from solar energy as the average EU country and ten times more than Sweden.

Although solar energy still accounts for a small share of the Netherlands’ electricity generation – about 14 percent – it has seen rapid development, doubling in the past two years.

However, the Dutch government recently voted to phase out the country’s net metering system, which has been in place since 2004. The scheme created a financial incentive for households to invest in solar panels by providing credits for excess energy.

Cleve Jones

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Most people in advanced economies believe that their country would be better off if it were open to change rather than clinging to a traditional way of life. survey by the Pew Research Centerr.

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As the world faces “rapid technological advances, economic upheaval and changing values,” countries are engaged in “fierce policy debates” about how to respond to these types of changes, Pew said.

People in the Asia-Pacific region are particularly open to change, with more than seven in ten in South Korea, Singapore and Australia sharing this view.

The most notable exception was Greece, where most people said their country would be better off sticking to its traditions.

Younger people, those on the ideological left and those with higher education were more inclined to change than older people, those on the ideological right and those with less education.

Ella Hollowood

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