It wasn’t too long ago that I didn’t know about, understand or care about inflation. Now as a businessman running a small business, inflation is going to affect the business, my life, your life and the short term whether we like it or not. With the growth mindset ever present, over the last two years I have started to educate and understand that which was once a vague “grown up” word.
Now although I may have years behind me physically, that doesn’t always convert into mental years, I for instance still enjoy “honking” the Mrs boobs. (even writing boobs, made me laugh, I am not a mature person). So, What is inflation? and Why does it affect the business? Lets be sensible for a moment shall we.
What is inflation? Well its essentially a hidden tax, as inflation goes up, your purchasing power goes down. Lets say you had £100 under your mattress, at zero percent inflation you could buy 100 cans of coke. BUT if inflation was 5 percent, you could only buy 95 cans for that money. Simply put your money doesn’t go as far. A couple of real life examples would be (again with 5% inflation) if you had a bank account with a 1% interest rate, well your savings are now losing 4%. If you have a pension that proudly says it pays 3% per year, your pension pot is now down 2%. These examples have been grossly simplified but you get the point. On the flip side of the equation though if your mortgage is 2.5% then inflation at 5% makes it -2.5%. Or if you had a loan at 5% you are essentially paying no interest in real terms. Inflation is good for debt in essence.
So what causes inflation?, well there are a few reasons for the current inflation hitting the world at the minute, as we speak in Britain inflation is 5.4% and rising. Due to the global bastard, that is the pandemic, A LOT of money has been printed (about a Trillion, that is a thousand billion!!). When the government creates more money (Quantitative Easing), money is abundant, easy to get hold of and due to it flooding the system it loses value. It is worth noting that if you or anyone else “creates” money it is called counterfeiting. If something we hold is in abundance, it does not hold a high value, imagine if there was a thousand Mona Lisa’s or if diamonds laced the pavements, society would not deem these items in such high regard. History shows printing money causes a major increase in the probability of inflation, from Weimar Germany to Venezuela to Zimbabwe, inflation generally rises as Quantitative Easing occurs. Now I am not saying we are destined for one of those calamities but we have increased the probability of inflationary times persisting, meaning our purchasing power is going to keep decreasing. This is what happens as the proverbial inflation genie is out of the bottle, once its out, it is very hard to control and get back in the bottle.
Another reason we see prices rise is supply chain issues, as transport, oil, cargo containers all shot up in price, with a lack of lorry drivers meaning less lorries supplying the shops, less veg pickers, more online orders, lots of issues caused our shelves to be stripped bare. We all have experiences of having to go to shop after shop in order to find certain items. Pasta, toilet roll, chopped tomatoes and many more that were all increasing in difficultly to buy and due to that fact we were all happy to pay more due to the shortage, those prices went up. The supermarkets paid more to confirm the items for their stores, so prices increased. The haulage companies paid HGV drivers a massive increase in wages and bonuses to get them back to work, that cost has to go somewhere!. Once prices go up they rarely come down. I would feel safe in saying your shopping bill has increased over the last year.
At this juncture, it would be remise if I didn’t inject a bit of positivity here. We have as a country done pretty damn well getting through it (just look at some of the world), we have a health system that, although under funded, managed to give us an option for vaccination. We were pivotal in the advancement of the vaccine and it is true when they say the NHS is the crown jewel of Britain. Imagine being in a country where insurance is needed for the most basic medical care, for risk of losing thousands of pounds in paying for care that we in Britain receive for free. Now, to make this perfectly clear, when I say as a country, I mean the people, the NHS, and the tenacity of the community. I hold no political affiliation for any of the FuckWits, cockwombles or bellends in the political system, that’s not to say I am Anti establishment, I am sure there are people fighting the good fight for a better country, they probably didn’t get a party invite. You guys and girls vote for who you want, but who is in charge makes no difference to me.
Anyway back to rising costs in this ever chirpy blog (sorry but important to know). As of the time of writing Russia is planning to invade Ukraine. Its all about military positions, NATO responses, broken treaties etc but what it means is a spike in energy and gas prices, as supply shrinks prices increase, now Russia is extremely vital to Europe, not quite as much to Britain, for oil and natural gas. This causes a pinch in the thin reserves throughout the continent and we are left with a surge in prices. Filling up your tank has already gone up and will continue to and in Britain, cockwomble A and cockwomble B have announced in parliament that energy prices are set to increase drastically, costing the average household hundreds of pounds extra a year just in energy.
As the owner of a small business, I have to take note. A wise person once said “once you have the information, its YOUR responsibility to act!”. And, although this businessman doesn’t always show a responsible side, as anyone who follows us on social media knows, I am a 38 year olds who still makes cock jokes as a form of marketing, it is something to meditate on. How will it effect the business?, what can I do?, what approach should I take? who can I learn from?
Being a regular and unhappy shopper (see previous blog), this grumpy A-hole has noticed the prices going up. In some cases gradually but in others its been very steep. This is how we know inflation has integrated itself into our daily lives. The 5.4% calculated by the government is across a basket of items. So if you mainly buy certain products the percentage could be a lot higher for an individual. Take for instance our baked goods ingredients, sugar is up 45% per kg, butter is up 16%, eggs are up 9% and cocoa in up 17%. The governments calculations do not exactly fall in line with those amounts. This isn’t to say the government is rigging the figures, but other research has the average at 7-12%, it probably just comes down to what you like to purchase in life. I myself enjoy food, heat, and the freedom of driving but I may be the minority.
This means that for a business we are essentially an aspiring pornstar and getting it from both directions whilst trying to grow our name, costs of what we buy are going up and our profits have less purchasing power than before. The obvious solution is to raise prices, that is what many companies are doing without a second thought for the customer, but that could price some of my customers out. Some companies perform the magic trick of “shrinkflation” when they make a product smaller but charge the same. This means Mars bars really were bigger when you were a kid, its not just because you are now grown up. Some industries will play it riskier with “last minute inventory” ,this means they don’t have to worry about paying extra storage but this is the gamble that supply chains will not be late, if they are then the proverbial hits the fan.
Then there is me, what do I do?, well to be truthfully honest I don’t know. The drive of the business, even before it was a business, was to make “GOOD FOOD ACCESSIBLE TO ALL“. It wasn’t about money, it was about an infinite mindset, a goal that essentially can never be achieved. It has never been about watching other people, trends or following the crowd. If I have told this story before I apologise but it bares repeating. When I was a kid we didn’t go out to restaurants. Not many people did, it just wasn’t a big deal or a social norm where I grew up. The pubs would do scampi in a basket etc, it wasn’t a time of culinary excitement. When onion rings were seen as a fancy side dish, and Sara Lee was the purveyor of every dessert you get the idea. But we went out once a year, to celebrate my Mum and Aunts birthday, the whole family. We used to go to a pub, Paul Pry (like a Bernie Inn). I used to love it, the excitement, the different food, (pineapple on gammon, knickerbocker glory, fudge cake, hunters chicken), it all seemed exotic to a kid of meat and two veg, double egg and chips or stew and dumplings. Although it was once a year, that didn’t matter, we had a great time, the service, the food and everything made it special. THATS WHAT MY FOOD HAS TO DO. I don’t care if you order once a week, once a year or just simply once. It doesn’t matter if you are a millionaire or just scrapping by. THERE IS NO DIFFERENCE TO ME, no pretention, no derision if you don’t understand what something is. That is what makes this different when tackling inflation compared to an owner or board who are detached from the customer and care purely about a finite mindset of facts and figures. I proudly deliver to every area of the city, I respect the fact that people have chosen us for that special occasion and that they maybe spending money they have saved especially for said occasion on us. On more than one instance I have been told I am too cheap, but they don’t see that I am ACCESSIBLE TO ALL, and that’s how it has to be. That is the soul of the business.
One thing is for certain, that by educating yourself, you can be aware of pitfalls before they happen. There are plenty of websites, articles, blogs and books about what to do to protect yourself during times of inflation. That is your choice, as is political affiliation, as in opinion of the world. In regards to Sunday Dinner Season we only have a few weeks left so no prices will change. So maybe the answer will come to me soon enough…. I WISH
happy eating
FOOD ANARCHY 