Somewhere right now, a crop is failing. Or a shipping container is sitting in the wrong port. Or a factory in Germany has just been told its energy costs are going up. None of that affects your weekly shop today. But give it a year, and it will.
This is the bit about inflation that nobody really explains: it does not arrive all at once. It moves in a wave, and the wave has a very specific order. Raw materials first. Then the people who turn those materials into things. Then the shops that sell those things. And finally, you – standing at the checkout, wondering why pasta has gone up again.
The start of the wave is the bit you never see directly. Commodity prices – wheat, oil, cotton, copper – shift constantly, and these shifts ripple outward the moment they happen. A bad wheat harvest in one country does not raise the price of a loaf in Tesco the following Tuesday. It raises the price a miller pays for grain. That is where the wave begins.
The miller then either eats the cost (briefly, reluctantly) or passes it on to the bakery. The bakery holds out as long as it can, because long-term contracts with retailers do not just snap overnight. Then those contracts come up for renewal, and suddenly the bakery is negotiating a new price per unit – a process that alone can take six months. The retailer then decides how much of that to absorb and how much to put on the shelf. Another few months. By the time you are standing in the bread aisle paying 30p more for an 800g loaf, the thing that caused it might have happened well over a year ago.
The useful flip side of this – and it is genuinely useful – is that it works the same way in reverse. When commodity prices fall, the same wave rolls back through, just as slowly. Oil drops. Energy costs for factories drop. Manufacturers quietly stop raising their prices. Retailers, after a while, start competing on price again. The checkout receipt does not fall immediately, but it does eventually fall.
You are always standing somewhere in the middle of a wave you cannot quite see the shape of yet. For more on how this sequence plays out across specific parts of your budget, *The Colour That Was Decided Before You Even Walked Into the Shop* is worth a read.
The practical thing this gives you is a kind of early warning system, if you bother to pay attention to it. When commodity prices are high and rising right now, expect to feel it at the tills roughly twelve to eighteen months from today. When commodity indices start dropping – and they are published and freely available – that is your first sign that the checkout wave is coming back down, even if the shelves have not caught up yet.
Most people think of inflation as something that happens to prices. Really it is something that happens to prices in sequence, with a long delay at every stage. You are not at the start of the chain. You are at the end. Which means by the time it reaches you, it has already started turning around somewhere else.
