Unless people who can afford it are hoarding groceries an increasing monetary base shouldn't be affecting grocery prices. Only a decrease in supply versus demand, or increase costs of production, should be increasing grocery prices, if market manipulations aren't happening.
I actually do get it. An excess of money doesn't automatically make things cost more. An excess of demand with (more purchases), or for (higher prices), that money does. The demand excess has to start somewhere.
What do you think putting more money into circulation does to demand & nominal purchasing power?
An excess of money causes increased demand per unit dollar and subsequently, higher prices and inflation, through mechanisms including the Cantillon effect, changes in monetary velocity etc.
If i deposit more $ in your bank account, what happens to your nominal demand?
If it was as simple as you say, why didn't we see double-digit inflation in 2021 and 2022 when the money in questions was actually being handed out? There are multiple factors at play here with "money machine goes brrr" being only one of the causes of inflation.
> What do you think putting more money into circulation does to demand & nominal purchasing power?
Ideally people would save for a rainy day. But people don't, and can't, always do this. Because for some this is the rainy day.
Non-ideally I would assume that most demand increases would go for non-groceries, and non-commodities in general, such as housing and travel, though I would expect some increase in durable goods commodity prices as people replace older goods with newer. Yet here we have grocery price increases. Are salaries in the grocery production chain going up 18%? Warehouse costs? I doubt it. The price increases are mainly coming from elsewhere, not from money printing.
It doesn't have to be groceries that they're buying. Factories in China producing non-essential consumer goods run off the same natural gas supplies that could otherwise be used to make fertiliser. Jets taking tourists on vacations run on basically the same fuel that could go into farmers' tractors or lorries transporting food to stores. More money allowing people to make more non-essential purchases impacts food supply if the global economy and global fossil fuel supply don't have the capacity to produce that stuff, and it turns out they didn't.
Sure. But there's a more immediate impact to fossil fuel supplies in the UK than an increase in demand. An increase in demand from an increased money supply is likely a contributing factor, but not the sole cause that elevenoh4 says it is. Has fossil fuel demand even fully bounced back to what it was in 2019?
