Food price inflation in UK over a very long run: From 1086 onwards – Beragampengetahuan

Bank of England Governor Andrew Bailey discusses evolution of UK food inflation from 1086 onwards:

In the United Kingdom we are lucky that the data allow us to take a very long perspective.  Chart 2 shows a consumer price index (in orange) derived rom the Bank’s dataset containing  ‘A millennium of macroeconomic data’. 

The index goes back to 1086, the year of the Doomsday Book survey. This was before online forms and telephone interviews, of course, and by all accounts response rates were high. Let us not speculate on the incentive mechanisms in place. The data sources become sparser in the subsequent century but thanks to the painstaking work of economic historians, we can trace consumer prices again with some confidence from the early 1200s.

From the Bank’s own records, we can find snapshots of this long development. Invoices kept in our archives show that, in 1713 for example, the Bank was paying two old pence for a loaf of white bread – something of a luxury at the time – and a shilling and one old pence per pound of butter. Converting these numbers into the new pence we use today, this is about 0.8 and 5.4 pence, respectively. In turn, the difference to the £1.55 and £3.45 demanded by a supermarket on Cheapside in the City of London this morning reflects inflation over the past three centuries – the increase in the nominal prices charged for real goods – such as bread and butter – over the years.

The chart also shows agricultural prices back to 1209 (in blue), incidentally the year King John was excommunicated by the Pope. The trend in the general level of prices moved closely with agricultural prices over the following seven centuries. Agricultural products, such as wheat and barley, were important inputs into bread and beer. And bread and beer were large components of the consumption basket. In the medieval period, food products amounted to as much as three quarters of overall expenditure.

In the late 19th century consumer and agricultural prices started to diverge. From around this time, agricultural prices grew more slowly than other consumer prices. The share of food in overall consumption fell as increasing prosperity allowed people to enjoy more consumption than life’s essentials. And technological advances and international trade led to significant efficiency gains in food production and distribution, from tractors in the fields, through industrial bakeries to the supermarkets that sprang up across the country.

Fascinating stuff.

This entry was posted on December 7, 2023 at 4:30 pm and is filed under Academic research & research papers, Central Banks / Monetary Policy, Economics – macro, micro etc, Speech / Interviews. You can follow any responses to this entry through the RSS 2.0 feed.
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