BRITAIN’S TRADE CHALLENGE: TRACKING THE COSTS IN REAL TIME

Richard Davies and Josh Hellings

National Institute Economic Review, 2024, vol. 268, 15-29

Abstract: Since early 2021, food prices in Britain have increased by 30%. Using monthly microdata, researchers have found that frictions in the UK’s new trade relationship with the European Union (EU) play an important part in this inflation. The trade relationship is evolving, with further changes expected in 2024. This article establishes a framework for identifying trade-related inflation in close to real time. Using programming techniques, we collect daily prices of over 100,000 supermarket items, covering 80% of the UK grocery market. We identify 1,200 products from 12 countries with a protected designation of origin (PDO). This allows us to link price changes to individual EU economies. Addressing the predominance of EU PDOs, we employ a large language model to discern product origins from additional web-scraped data, thus broadening our analysis to cover over 67,000 products. Since August 2023, we find that prices for EU-originating food products have increased at a rate of 50% higher than domestically sourced products. This study presents a unique methodological approach to dissecting food sector inflation, which is well-positioned to be used in a policy setting, allowing us to assess the possible impact of impending nontariff barriers at the GB-EU border in 2024.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:cup:nierev:v:268:y:2024:i::p:15-29_3

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