Cost of Living

This article on the Cost of Living got me thinking about the economy and at what point 'things', market forces, will come into play to correct and recalibrate the economy.

Based on the rising costs of feed, fertiliser, and energy, the market forces that could come into play are:

Price Increase: When the cost of production increases, firms may choose to pass on some or all of those costs to consumers in the form of higher prices. This can help to offset some of the increase in production costs.

Increased Supply: If the demand for a product remains unchanged or increases, firms may choose to increase production to meet this demand. This can help to reduce the price of the product as the increased supply can help to bring down the cost per unit.

Decreased Demand: If the price of a product increases, it is possible that some consumers may decide to purchase less of the product or switch to a substitute. This can help to reduce demand and bring down the price of the product.

Substitution: When the price of a product increases, it is possible that some consumers may switch to a substitute product that is similar but cheaper. This can help to reduce demand for the more expensive product and bring down its price.

Improved Efficiency: Firms may also try to increase their efficiency in order to reduce production costs and keep prices competitive. This could involve investing in new technology or finding ways to streamline their operations.

With inflation already high, this surely rules out Price Increases - increased prices will only exacerbate inflation. And with energy costs being at a record high, this would rule out Increased Supply and Improved Efficiency.

This leaves Decreased Demand and Substitution; it looks as though a decrease in demand has, at least, led to a price drop in non-food items. For food items, this could represent a great opportunity for suppliers that can offer cheaper substitutes.