this is bbc news. the headlines... the prime minister confirmed that british diplomats and their families have been evacuated from sudan in what he calls a rapid and complex evacuation. it has been confirmed that the evacuees will be heading back to the united kingdom after first making a stop in cyprus. the us military have sent a three chinook helicopters to evacuate its embassy staff in khartoum. the french official says that around 100 people of multiple nationalities have been evacuated after a complicated rescue operation. in the uk, liberal opposition mp diane abbott has been suspended from her party pending an investigation and

to a letter that she wrote about racism for the british observer newspaper. under dutch and kenyan runners have won the race in the london marathon. now it's time for... hello, everybody. a very warm welcome to talking business weekly with me, aaron heslehurst. let's go and take a look at what's on the show. the cost of living has been going through the roof, but can it possibly go up even more? and do prices ever really come down? we're going to be looking at how those prices get set and what goes on behind the scenes between growers, suppliers and the shops themselves. i'm going to be discussing all of that with this crack team. there they are. commodities expert kona lasker haque can tell us where the markets think prices of raw materials are heading. kai—markus mueller, who's the neuroscientist who gives us

the psychology behind the way shops set their prices. and christel delberghe, she's the boss of eurocommerce, which represents the big retailers in some 27 countries across europe. also on the show, from the coffee field to your daily mug ofjoe, i've got antonio baravalle, the big boss of the coffee giant lavazza, to talk to us about pricing from bean to cup. wherever you'rejoining me from around the world, once again, a big hello and a very warm welcome to the show. blimey, how much is that? you know, that's the question millions of us are now asking ourselves as we shop for everyday essentials. the cost of most of the things

that we buy has gone up and up for pretty much everyone on the planet. this inflation is the reason central banks are ramping up their interest rates. workers are demanding higher wages and shops, they are the new battleground between retailers and their suppliers. the boss of the biggest retailer right here in the uk, it's tesco, told the bbc about how his company negotiates with suppliers about price. i think you need to talk to the individual suppliers if you think that their price increases are hard to justify. we work very hard at tesco to analyse the make—up of our food products. an awful lot of our own label is bought on what's called an open book basis. in other words, we see what the ingredients are costing our suppliers, and we have an agreed kind of profit margin for them on top of their raw material costs and their operating costs. so we know exactly what's going on there. and, you know, we don't

have the same access to the profit structures of our branded suppliers, but we do challenge them as hard as we possibly can. ok, so let's start with the raw ingredients. take wheat, for example. before the pandemic, about four years ago, a bushel of wheat was trading on the market at $4.70. that spiked when russia invaded ukraine one year ago. the same amount of wheat went up to almost 13 bucks a bushel. but at the end of march this year, it was sitting at around $7, much less than the peak, but still 47% higher than before the pandemic. it's a similar story with cooking oil. before the pandemic, a pound of soybean oil was trading at around $0.29. after the war began, that shot up to nearly $0.76, so more than doubled. and now it's settled somewhere in between at around $0.55 a pound. still, 90% more than before the pandemic.

much of those costs follow the same pattern as energy prices. oil prices — they were coming down, but they shot up again in the last week or so after the oil—producing cartel, 0pec, along with its partner russia announced that they would cut just how much oil they sell, causing prices to head higher once again. so, where are the prices of these essentials heading right now? well, to find out, i caught up with one expert whose predictions over the last few years have been pretty accurate, to say the least. kona lasker haque, it's always a pleasure having you on the show. kona, you and i have spoken over, over many years about the direction of commodities, and i'm going to be frank here, you've always been ahead of the curve. so, what, if anything, can the commodity markets tell us right now about the direction of prices going forward? so, commodity prices have actually stabilised a bit. they had peaked out back in the summer of 2022 last year, just after the ukraine invasion. and now they've fallen

quite a bit since then. but we're not quite out of the woods, because oil prices are picking up again. there are a lot of suppliers amongst 0pec who are looking to cut back production. china has come back into the world market and they're consuming more after their post—covid lockdowns. so there are some supply—demand tightness emerging in certain commodities, which means that, yes, prices are lower than they were a year ago, if you like, but they're not drastically coming off either. kona, you and i right now are here in the uk and i'm wondering, are there any special factors here in the uk? or are we seeing prices just consistently behaving the same as other countries? no, i think in the uk we've seen food inflation being a bit more of a factor than our peers. and i think there are a couple of reasons for that. the first one i would say is brexit. the brexit has led to

quite a few disruptions on the border side of things. so, flows of imported goods from europe, which is our biggest trading partner, has not been smooth and frictionless. so there's definitely been a lot of delays and cost increases on that side of things. and the second impact, slightly related to brexit, but also perhaps more due to post—covid, it is the lack of labour. you know, we have seen the so—called great resignations phenomenon where a lot of people are no longer in the workforce. but again, also perhaps due to brexit, we've seen quite a few temporary workers leave the uk to go back to the european union. you know, we were relying on them for processing the foods or at the farm, farm level. and i think the lack of labour or as a result the higher cost of labour means again that the cost of food, by the time it gets to the supermarket, has become elevated so much more than it normally would have been. and, kona, i've done it before,

i'm going to do it again. i want to put you on the spot. in a year's time, what are prices going to be doing? that's tricky, because this time last year you asked me the same question. and, thankfully, i was right. i'd suggested that prices were going to go quite a bit higher. and, yes, they did. a couple of factors. number one, the world economy is under a bit of stress. so, demand is slowing, i would say, across the board, mostly because of the cost of living crisis. inflation is just very high, which makes people feel poorer and means their disposable income is less. secondly, interest rates are going up, which again has the same impact of making you feel less wealthy, if you like. so that might impact demand to a certain extent. if demand slows, what happens on the supply side? and that is where the big question is. i think if you were to ask me a year on from now what's going to happen to russia and ukraine, unfortunately, ifeel that the the war will continue, which means that will continue to remain a supply—side block, which remains mired in uncertainty. so, whether it's the grains

corridor or exports flows, that can continue to be fraught with risk. and the final thing is the other producing regions, you know, we are seeing some sort of climate change, unfortunately, which does create havoc across the world, particularly tropical countries. so, whether it's floods or droughts, inevitably you're going to see some of that in some key producing region. and i think that, again, may affect the supply side. so, bottom line, unfortunately, i think prices are not likely to get back to levels we saw pre—2019, the pre—covid levels because the whole world has structurally changed. costs are higher, inflation is here, the cost of processing and shipping things are high. so prices may come off a little bit, but we're not going to go back to levels we saw five years ago, for example. so, kona, i'mjust wondering, do we as consumers who, let's be frank, have been used to pretty cheap food for some years,

do we have to just now get used to these higher prices? i think the whole 2000s and early 2010s where we used to enjoy really good prices for pretty much everything, we enjoyed low inflation for the longest time — those days are gone. we're now going back to the �*70s and �*80s, not skyrocketing. inflation will come down, but we're not going to see the rock—bottom prices that we saw back in the early 2010s. i think those days are gone, unfortunately. interest rates are going to be have to stay high in order to tackle inflation. but it also means that we're going to have to think twice before we go for our expensive food habits. well, on that point, kona lasker haque, my friend, a real pleasure having you on the show, as always, and, kona, i'll talk to you soon. thank you so much. so, there you go, that's the start of how prices get set. but how much does psychology play in the price that we pay for our shopping? well, my next guest has literally

written the book on this. it's called the invisible game: the secrets and the science of winning minds and winning deals. kai—markus mueller, a real pleasure having you on this show. and, kai, let's start with this. what are some of the tips and tricks that retailers use? well, there is a wealth of them in consumer psychology. but i'll tell you a few of them. a very, very, very strong component is, for example, the default effect. so, for example, if you have a subscription, it renews by default, and we have trouble thinking about the renewal, wejust let it go. then there are things like red signs for discounts. people have learned these things, over and over that red signs give you pleasure. people believe that they get a good deal, despite the fact that they are actually playing a game that is set by the company that sells these products. and, kai, i'm wondering,

do you think, you know, are consumers more likely to be accepting of rising pricesjust because of all the information about inflation that we're constantly hearing about? yes, absolutely. 0ur minds adapt very quickly to new situations. and a very important concept in that respect is anchoring. so, if i am getting used to high numbers, also my price perception goes up and i am more much more willing to accept high prices. however, one problem from the corporate perspective is that, if you train your consumers to become bargain hunters, it's very hard to retrain them to accept high prices. well, kai, economics would suggest that we would always choose the best value. but that's not always the case. i'm wondering, do consumers find reassurance in higher prices? indeed.

that is something that scientists call the price quality heuristic. and that means that not only the high quality influences the price — which is how we usually think about the world — no, the price also influences the quality perception, and that has been shown in a number of incredibly interesting studies. for instance, it's been shown that the same wine, the same wine tastes better if it's designed to be expensive. also, painkillers. the placebo effect of a painkiller is much stronger if you label that painkiller as an expensive painkiller as opposed to a cheap painkiller. and, kai, what do you think about companies using shrinkflation? you know, keeping prices the same, but making the product smaller? i mean, is that effective? if shrinkflation is

effective depends very much on the perceptual threshold. so, for example, in weight, if i compare two weights, i need at least two grams of difference for 100x100 grams to perceive that difference at all. now, over time, that becomes more, so i maybe forget that last week, you know, that carton of milk or that little piece of tea or so was slightly heavier than this week. so, companies understand what the perceptual threshold for the different units is, they have good chances to make shrinkflation successful. kai, are retailers, are they nervous about raising prices? oh, yes. that is a big issue.

everybody who sells is very, very nervous about prices. indeed, i ran brain scan studies where i could show that the consumer willingness to pay is, in some cases, significantly higher than the value perception of the person who sells. that means there is a strong hurdle and lots of pain on the seller side, which is completely unnecessary. kai—markus mueller, an absolute pleasure having you on the show. thanks so much for your time and i'll talk to you soon. thank you for having me. well, you know, in the end, it's the price in the shops that customers really care about. so, what kind of pressure are they under to keep the costs low

and how do they negotiate with their suppliers? well, to find out, i've been speaking with the director general of eurocommerce. that's the organisation that represents retailers and wholesalers in 27 european countries. christel delberghe, a real pleasure having you on the show. and, christel, can we start with this? because as we've been seeing the costs of raw materials heading higher, how much pressure are your members facing to keep the prices down? well, the pressure on retail is immense. today, inflation in europe is about 10% and inflation in groceries is 19%. and the pressure on retail is exerted via the higher cost of the goods for resale, the higher cost of operation. and they're facing consumers hit by a severe cost of living crisis. for them in the retail, the retailers have been able to cushion consumers from the worst of the inflation. retailers have been absorbing part of the higher cost increases. and they've been doing this via promotions by making a huge

investment in pricing to ensure that consumers... ..to ensure that consumers can get good deals. and, christel, i'm wondering, what kind of conversations are the retailers having with the suppliers? well, the conversations are pretty tough and the situation is very difficult at the moment. retailers negotiate on behalf of consumers for the best deal and the best assortments. and what we have seen is a concerning trend by the manufacturers to seek, in particular from the large global manufacturers, large global brands, who have been seeking to push up price increases beyond the cost increases. and, christel, i'mjust wondering, are your members, the retailers, are they reporting the changes, any big changes in consumer

behaviour due to the cost of living crisis? yes, indeed, consumer behaviour has changed quite significantly, and it has changed across the board. they're favouring long—shelf—life products like rice and pasta, they're looking out for promotions and they stock up when buying on promotions. they're looking for cheaper brands, some more budget—line products, more private labels. they're investing a lot to help consumers and to cushion them from the worst of the crisis and inflation, the high prices. and, christel, what are your retailers saying about the outlook for prices? i mean, are more rises to come, do you think? well, the situation is still very uncertain. we expect prices to go down in the course of the year as energy prices are going down,

as the commodity prices are going down. in the agri food chain, there is a lag. and so prices should stabilise more likely towards the end of the second half of the year. but in the meantime, in the meantime, our prices are still keeping up. well, on that point, christel delberghe, a real pleasure having you on the show. thanks so much for your time. and i'll talk to you again soon. thank you. you know, on today's programme, we've been looking at how companies are setting prices as the costs go up and up and customers are squeezed. coffee, it's a treat, but the price of coffee beans has been on the rise, like so many other commodities. four years ago, before the pandemic, a pound of arabica beans was trading on the market at around $0.94. one year ago, after the invasion of ukraine, thatjumped to $2.33 a pound. and in march this year, it was trading at around $1.68.

so somewhere between the two, but it's still 80% more than pre—covid price. add to that the increasing cost of energy, and it's a challenge, a big challenge for big coffee companies to think about how they pass on the costs to their customers who are thirsty for their morning cup of go—gojuice. so i've been catching up with the big boss of lavazza, the iconic italian coffee giant. antonio baravalle, a real pleasure having you on the show. and, antonio, let's start with this, because this week's show, we've been talking about how difficult it is for companies to set prices. and we've seen coffee bean prices go up quite a lot. so i'm just wondering, antonio, how have you dealt with that when it comes to setting your prices? i think that all the industry faces very, very huge cost increase. and also remembering that a company like us is buying in dollars at the new york stock market. so the ratio between dollar and euro is so important. so we only partially pass the cost increase to consumers.

so i would say that at least 50% was absorbed by the company and 50% was given back to the industry, so to the market. but again, this is up to the fact that we can do it because we are a family company. and, antonio, you negotiate with all the big retailers around the world. i'm wondering how difficult have those negotiations been, given these surging prices? yeah, you know, i totally understand also their position because if i compare what is happening to retailer in this moment, you know, costs like energy that in the past were less than 1%, now we are to 5%, 6%, 7% that at the end they buy and very sell the products to consumers. so i would say that it's very, very tough discussion for sure. and we got many example

in all europe of tough discussion between trader and, you know, fast—moving goods company. i think that we always have been very reasonable in the last three orfour years in the relationship with the trade, knowing that there is the right limit and the right balance sheet for them, for us, and the right threshold where the two faces can start talking to each other. so i would say it's a very tough discussion, but probably thanks to our past years�* history, and the credibility also that we got on the market, we have always been able at the end to find the right solution with them, but not an easyjob.

but these retailers, they often have their own brands. i'm just wondering, is that a big plus for them when negotiating? you know, in theory, you should have a chinese wall between your private label business and all the rest, in theory. but, you know, from one side, it can also help them to understand the reason why of price increase, because they have to buy raw materials, they have to buy coffee. they know very well that normally to give you the right dimension of a timing. when i order coffee today, it takes four months before it arrives in italy, and one month, two months before that we transform it and we distribute. so, even if the price tomorrow morning is going to go down 50%, we got six months of tailor that doesn't allow you to

change anything. so i would say if a trade with a private label do our business inside the coffee category, it also helps them to understand what does it mean from, really, a supply chain point of view. then everyone is trying to do his own game, but that is another issue. and, antonio, let me ask you this, because some coffee producers, rather than risk putting off consumers by increasing their prices, what they've been doing is changing the sizes of their packaging. of course, it's become known as shrinkflation. is that something lavazza has entertained? i will be very strong. that is a joke, because we have too much respect for our consumer. is not the changing a visible price and giving them less products that you know you do the good for your consumer. as i told you, we are smaller.

so we decided to take part of a cost increase in raw materials because we wanted to, we wanted to increase penetration. and in fact, the last year we grew also 5% in volume. that is very tough in here, like this one, doing something like that, we consider not a serious approach towards the consumer. so we have too much respect for them. 0k. let me end on this and let's spin a yearahead. antonio, prices higher or lower than today? i still think that we didn't see yet a small piece of inflation, but we will see it on prices, let's say, before the summer, because all companies will rise the prices in october, november, but have to argue with a trade to discuss. normally, this is a six months�* time, so i'm not going to say to the cost before covid, but a more reasonable cost. so, we are going in that direction.

but i think that there will be still six months where we could have some small surprises yet on inflation. well, on that note, antonio baravalle, the big boss of lavazza, a real pleasure having you on my show, my friend. thanks for your time and we'll check in with you soon. thank you. it was a pleasure and an honour to be with you. well, that's it for this week's show. i hope you enjoyed it. don't forget, you can keep up with the latest on our global economy on the bbc website or the smartphone app. you can also follow me on twitter, tweet me, i'll tweet you back. you can get me @bbcaaron. thanks for watching, i'll see you soon, bye—bye.

hello. there's quite a mixture of weather across the uk at the moment, some areas seeing clearer spells, others with cloud and rain. the remnants of an area of low pressure pulling away eastwards. it's going to get somewhat clearer to start the new week, but it is also going to turn notably chillier. here's the low tracking off towards the continent as we finish up on sunday. behind the low, we're hooking in a northerly breeze and we're going to pull arctic air all the way south across the uk for monday, and it'll stick around for tuesday and wednesday as well. that colder air moving into scotland even through the evening. strong winds, particularly around the northern and eastern coasts and across the higher ground, and wintry showers developing. the rain pulls away from eastern england, but some wetter weather monday daytime, that colder air continuing itsjourney south across the uk. we have to factor in the winds to the way things will feel as well.

particularly strong across northern scotland and down many of our north sea coasts. some rain pushing across out of the irish sea into south wales, the south west of england. some showers getting into the south east by the end of the afternoon. and then showers across scotland will be of snow and potentially even down to lower levels. six degrees in aberdeen as you would read the temperature on the thermometer, but don't forget, we do have to add in the effect of that wind. when we step outside. with wind chill, it's going to feel closer to freezing here. and overnight monday into tuesday, speaking of freezing, just look what happens to our temperatures. clear skies, winds becoming somewhat lighter, a widespread frost developing and a hard frost in some areas. gardeners with any tender young plants out do keep that in mind. the wind becomes lighter because this finger of high pressure extends south across the uk for tuesday. there will be a lot of fine weather around. we will continue to pick up a few snow showers, i think for northern and eastern scotland on the breeze.

high cloud tending to cover our skies, turning the sunshine hazy as the day plays out, but i think if anything, with the wind a little lighter, the perception may be that it doesn't feel quite as bitingly cold as monday. wednesday, a very similar story to tuesday. end of the week, things start to become more unsettled again,

live from london, this is bbc news. i'm rich preston. our top stories: the uk prime minister confirms that british diplomats and their families have been evacuated from sudan in what he calls a "rapid" and "complex" operation. while the us military has sent three chinook helicopters to evacuate its embassy staff from khartoum, a french official says that around 100 people of multiple nationalities have been evacuated after a "complicated" rescue operation. alarm blares and this was the alarm that sounded on almost every uk smartphone earlier — part of the new emergency alert system being tested by the uk government. the dutch siffan hassan and the kenyan kelvin kiptum have won the race for female and male categories in the london marathon.