In January of this year, olive oil prices fell to 2009 levels. Four months later, prices have fallen to ten year lows. Consumption has plummeted in olive oil producing nations Greece, Spain, and Italy, together responsible for 70% of the world’s production. In parallel, a supply glut has hit the market due to a bumper crop in Spain. Meanwhile, struggling consumers have substituted cheaper oil like sunflower oil.
This price drop has put additional pressures on some of Europe’s poorest regions.
For more details see “Europe’s (olive) oil crisis“
Residents of San Jose, CA will vote in November on whether to raise the city’s minimum wage 25% from $8 to $10. The proposed law includes annual adjustments for inflation. This law will be similar to a minimum wage ordinance put into law in San Francisco.
I expect to hear a lot of economists weigh in on this issue, but it was interesting to read one councilwoman say that this is an economic AND a moral issue. Given these higher wages will be paid by businesses and consumers (that is, the law will nt suddenly create new money that was previously non-existent), I think introducing morality will cloud proper analysis.
I am also now interested to know whether anyone has studied the impact of the minimum wage law in San Francisco. It seems strange to me that cities in the same metro area could have dramatically different minimum wages. For low margin businesses that can move, they will prefer to go to lower wage cities. Workers will tend to look for work in the higher wage city but will also face impossibly high housing costs, resulting in commutes that can nullify wage gains. These are just a few examples of things that economists might study.
For more details see “San Jose City Council leaves minimum-wage hike to voters” in the San Jose Mercury News.
Inflation in the United Kingdom has been stubbornly and persistently high since the recession ended – it is currently 3% and above the Bank of England’s (BoE) target of 2%. The UK has been unique amongst the major economic partners in experiencing high inflation and slow growth since the recession. Through this period the BoE has insisted that it expects inflation to eventually (and soon) decline towards target. Every year that passes without the target getting hit, produces another year of frustration and impatience. Now that the UK has recorded two quarters of negative GDP growth, stagnation has descended upon the economy.
In last week’s Inflation Report, the BoE made an admission I do not think I have heard before. A reporter asked the expected and on-going question about the inflation problem. A BoE member answered that the depreciation of the British pound has contributed to driving inflation higher than expected. He noted that the BoE expected currency depreciation to behave as it did in the 1990s when it seemed not to contribute to inflation. Instead, the UK is getting the experience of the 1970s and 1980s. There was no discussion about the lessons learned or what features of all these periods are similar or different. However, I think this is huge progress that at least the BoE has officially recognized that a less valuable currency can still contribute to high inflation.
The price of attending the Illinois State Fair is skyrocketing again. This summer, it will cost $7 for adults to attend for a day, a 40% increase from last year’s $5 admission price. In 2009, prices increased from $3 to $5 in 2009 and broke a 19-year run at the $3 admission rate. It looks like Illinois is playing some bigtime catch-up. Children and senior citizens will pay an extra 50% at $3 per person.
For more details see “State Fair releases concert lineup; admission price increasing.”
Reuters reports that Greeks and Spaniards trying to escape economic and currency woes in their native countries are running to London in increasing numbers. The wealthier of these immigrants are snapping up property in London in attempt to protect their assets. The (average?) price for prime central London properties has increased by 44% over the last three years. Prices in London as a whole have increased at half that rate.
For more details and stories from specific immigrants see “Euro zone turmoil boosts London property stampede.”