srcg wake-up: The credit crunch one year on

The credit crunch is one year old this week and its impact has touched our shopping in many ways.

Prices are up and daily the news signals that there are more price rises to come. Energy price rises touch everything that we consume and for many, discretionary spend is way down.

This was hard for me to believe last Friday when the cafés and restaurants off Regent Street were bustling. On closer inspection many diners were Europeans and rightly enjoying the great Euro exchange rate. A year ago this was us across Europe.

My local pubs, normally busy every night, are now quiet through Thursday, picking up for the long weekend. One landlord told me that he is 20% off plan and that the “£3.00 pint” does not help. Another coffee shop closed on Monday. What will happen this week that will push our shopping basket still higher?

At a global level, the Doha Development round of World Trade Organisation trade negotiations failed on the key issue of market access. Putting aside the spin from pressure groups and governments, it failed because the big groups such as the USA and EU were instructed by their leaders to protect their producers.

The US subsidises its cotton farmers and is not keen to lose its export markets. India rightly wants to protect “tens of millions” of agricultural jobs, and Nicolas Sarkozy of France blames it all on the EU trade commissioner Peter Mandelson.

I would normally have some empathy with bashing Mr Mandelson, but this time it is not his fault. The removal of self interest and opening up of trade to poorer nations is why the Doha trade round was set up. It has failed and we will all pay.

At home, we are being hit by “charges and fees” everywhere we shop. The low-cost airlines were the first to commercialise the government’s clever “stealth tax” idea; little and often, amounts that we do not notice in isolation are added to the purchase cost.

My recent Aer Lingus flight to Belfast carried fuel, credit card, luggage and seat surcharges to more than double the quoted flight price. Perhaps I should have stood?

The food distributor Brakes, now owned by Bain Capital, has announced a 98p fuel surcharge on every delivery. Their biggest competitor 3663 has raised prices to cover their additional fuel costs.

The discount fashion retailer Matalan is implementing a blanket “2% deduction” from suppliers invoices, but reassures us that the discount is not being applied retrospectively.

Why is this important? Because it is indicative of a round of wider market price increases that will percolate down to the shopper.

Simple arithmetic shows that if we add up all these extra charges and surcharges, the cost of our weekly shopping basket of food, drink, energy and travel is going to go up some three to four times the official inflation figure.

The retailer who has increased prices by only 3.5% looks increasingly attractive! Can I please have their address?