Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
the article mentions rising oil prices as the reason for overall inflation.  but is that one is behind rising processed food prices in particular?  is there any relation to the shift towards biofuel crops?

but if so, then why should we expect prices to "fall back down" to "the historical average":

The ECB expected food price inflation to increase in the short term before falling back towards the historical average.

the article does not offer any explanation for why France has escaped this processed food inflation, except the hint that (French?) retailers are using profit margins to avoid passing on price increases to customers:

France's relatively mild experience with processed food inflation is puzzling, given rising public concern about increasing living costs. <...>

The ECB suggested prices were likely to rise less in countries where retailers were prepared to use profit margins as a buffer, especially if fears about the economic outlook made them reluctant to pass on price increases.

and does the following paragraph mean that "German economic optimism" entails ever more processed food inflation?

In Germany, by contrast [to France], fierce price competition, especially among discount supermarkets, has probably reduced the scope for rises to be absorbed through lower profit margins - and German economic optimism remains upbeat.

i.e. optimism => demand + smaller profit margins => continuing inflation ?

Truth unfolds in time through a communal process.

by marco on Fri Dec 14th, 2007 at 03:15:44 AM EST
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