The decline in buy-one-get-one-free offers and other promotions is pushing food prices up 2.4 percent in a month as the British are affected by the corona virus crisis
- Prices shot up between March 18 and April 17, the IFS reported today
- More than half of the increase could be linked to a massive drop in promotions
- The British economy shrank by an astonishing 20.4 percent in April
- Here's how you can help people affected by Covid-19
A dramatic drop in promotions like "Buy-One-Get-One-Free" resulted in food prices rising by an unprecedented 2.4 percent in a single month at the height of the coronavirus, a new report reveals today.
Prices rose between March 18 and April 17, when the effects of the disease became apparent and consumers panicked to buy essentials like toilet paper, pasta, and flour.
More than half of the price increase could be linked to a massive drop in the number of retail promotions, the Institute for Fiscal Studies (IFS) said today.
Its director Paul Johnson said: & # 39; This is a remarkable rise in inflation at the beginning of the blockade. Prices rise 2.4 percent in a month.
& # 39; We use scanner data to see exactly what happened. In large part due to a sharp decline in special offers such as "Buy One One Get One" that are not included in the official statistics. & # 39;
IFS director Paul Johnson said inflation was "largely due to a sharp decline in special offers like Buy One Get One Free, which are not included in official statistics."
A major cause is likely to be a massive drop in retail promotions, the Institute for Fiscal Studies (IFS) said today.
Although there was a "modest" fall in prices in the weeks after the increase, prices are still well before the pandemic, the report said.
The 2.4 percent increase was more than ten times the increase in consumer price inflation in previous months.
"In the first three months of 2020, monthly inflation is close to zero and similar to previous years," the report said.
& # 39; Between March 18 and April 17, however, inflation rose sharply by 2.4 percentage points.
& # 39; This is unprecedented in all comparative years. Slight deflation occurs from April 18 to May 17, although prices remain well above their pre-lockdown level.
It added that "the share of funding transactions in 2020 has decreased by around 15 percent since the block began".
A second report found that "more than half of this price increase is due to a lower frequency of promotions."
GDP fell by more than a fifth in the first month of the block and has shrunk by 25 percent since February. In this graph, 100 corresponds to the size of the economy in April 2016
Compared to the previous quarter, growth declined by 10.4 percent between February and April. During the credit crisis, the maximum decline of one quarter was 2.1 percent
"This reduction in advertising frequency is a possible driver for higher average prices and the associated inflation."
This happened when the UK economy shrank by an astonishing 20.4 percent in April – the biggest decline ever – when the corona virus wreaked havoc.
GDP fell more than a fifth in the first full month of the blockade after falling 5.8 percent in March, which was a record in itself.
UK plc has shrunk 25 percent since February, with the worst recession in 300 years when the Great Frost devastated Europe.
The reduction in tears in the eye, which is worse than analysts predict, shows the extent of the devastation the economy will suffer from the blockage and will put pressure on Boris Johnson to find a way to get the draconian curbs to loosen.
Cabinet ministers, including Chancellor Rishi Sunak and many Tory MPs, are calling for him to relax the two-meter long social distance rule that is strangling the hospitality and retail sectors.
Construction was hit hardest in April with a drop of more than 40 percent. Manufacturing declined 24.3 percent, and the power package services sector was 19 percent red.
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