So Nestle have decreased the mass of the Yorkie bar by a staggering 15% and are selling it at the same price. I can only conclude that the new Yorkie "is for girls", perhaps those that are on a diet for the new year. Sadly I expect this change to be permanent and I will have to look elsewhere for a chunky chocolate fix.
This did get me thinking about the nature of 'inflation'. The price of the product has not changed, however the price/g of the chocolate has gone up. For the chocolate consumer this represents an increase in the cost of living but I don't believe this will be recognised via the 'basket of goods' by which 'inflation' is measured. However there is a fundamental difference between a price increase caused by, say, a poor cocoa harvest reducing supply to the market and a price increase brought about by a devaluation in the currency caused by an increased supply of money. Which is true 'inflation'?
On another thing I am more certain, an increase in base money from the Bank of England is not directly inflationary. Since it tends to sit in commercial bank reserve accounts and does not flow outwards into the wider economy. The amount of money in active circulation is increased by commercial banks creating new loans. This is something that they are not currently doing much of, since the pool of credit worthy borrowers is shrinking (as unemployment increases and businesses contract) and their security of choice, real-estate, is falling in value.
