Archive for August 11th, 2009

Tesco beats deflation

August 11th, 2009

I always thought I had a reasonable grasp of economics.

I understood the basic principles -

  • Shops want more money so they put prices up
  • Workers want more money to pay the shopkeepers so they look for a pay rise
  • Workers go on strike
  • All hell breaks loose until eventually workers get half what they asked for.
  • And so on.

That is called inflation?

Deflation is where everything goes backwards.

  • Shops can’t sell things so they drop prices
  • Workers take pay cuts or lose their jobs.
  • No one buys anything because it will be half the price next week

So my understanding is that with inflation, everything goes up?

Deflation is where everything goes down?

I was doing a drop of on-line shopping last night and decided to use Tescos.

I found this -

Now I am really fucking confused.