There’s one extreme method of dealing with inflation. That is to ban it. This month, Unilever agreed to pay a fine of $300,000 after China’s National Development and Reform Commission accused the Anglo-Dutch company of creating panic by announcing its intention to increase detergent and soap prices. Such reckless behaviour was described as an “ugly habit” that “seriously distorted market order”.
But even in a planned economy, such “ugliness” is hard to airbrush out. Inflation stayed stubbornly high in April in spite of the state’s best efforts. In April, the consumer price index rose 5.3 per cent from a year earlier, a tiny improvement on the 5.4 per cent of the previous month, but still higher than expected.
Even if they can’t put prices up overtly, many companies have ways of getting around price controls. Manufacturers of soft drinks, crisps, milk and yoghurt have resorted to the old ruse of shrinking the packet size but keeping the price the same.