Inside Amazon's 'Secret' Ad Pricing System, According to the FTC

 

Inside Amazon's 'Secret' Ad Pricing System, According to the FTC

## A federal lawsuit alleges Amazon raised the price floor in some auctions after bids had been entered, costing advertisers billions.

For years, Amazon told advertisers it was running a fair "second-price" auction. The winner would pay just one cent more than the second-highest bidder. It was a system designed to encourage advertisers to bid their true value. But according to a sweeping new lawsuit, that's not what was happening at all.

On August 31, 2026, the Federal Trade Commission (FTC) and a bipartisan coalition of 22 states filed a lawsuit in federal court in Washington state. The complaint accuses Amazon of secretly and systematically overcharging more than 1.2 million advertisers—including over 500,000 small and medium-sized businesses—by manipulating the online auctions it uses to set advertising prices .

The alleged scheme, which the FTC says has been running since 2019, may have illegally extracted more than **$20 billion** from unwitting advertisers . "Amazon has rigged billions of ad auctions," California Attorney General Rob Bonta said at a press conference announcing the lawsuit .

## The Promise vs. The Reality

The FTC's lawsuit centers on three types of advertisements that appear alongside Amazon's search results: Sponsored Products, Sponsored Brands, and Display Ads . For years, Amazon publicly described its system as a "second-price" or "generalized second-price" (GSP) auction, which has been the industry standard for digital advertising placements .

Here's how a second-price auction works: prospective advertisers submit bids for a keyword. The winner, rather than paying their full bid, pays only one cent more than the next highest bidder. For example, if one company bids $200 and another bids $190, the winner pays $190.01 . This system encourages advertisers to bid more aggressively, knowing they won't overpay.

The FTC alleges that Amazon promised this system but delivered something else entirely .

Beginning in 2019, Amazon made a surreptitious change to its auction rules without notifying advertisers. The company began adding an undisclosed surcharge, referred to internally as a "soft reserve price," and also used an "invented auction participant" to artificially inflate prices . Instead of being charged the second-price amount, advertisers were often charged their full winning bid or a significantly inflated price.

Internal Amazon documents, cited in the lawsuit, describe the company's process as a "clever non-transparent way to charge first price" . One internal discussion noted that the price paid by advertisers "isn't set by an actual bidder," but is instead a "proxy 2nd price that we calculate" .

According to the complaint, the proportion of Sponsored Product advertisers paying more than they should have rose dramatically over the years—from around 30-40% in 2021, to around 80% by 2024 .

## The Defense

Amazon has strongly denied the allegations, publishing a detailed blog post on the day the lawsuit was filed. In it, the company argues that the FTC fundamentally misunderstands how its advertising business operates .

Amazon claims that its auction model is designed to prioritize ad relevancy for customers over simply the highest bid. The company says that in 2024, approximately 92% of selected Sponsored Products ads were not the highest bid, often by a wide margin . The company also argues that advertisers adjust their bids based on real-world outcomes—the sales they generate—not on theoretical descriptions of auction mechanics .

The company stated that from 2019 to 2024, the average winning bid for Sponsored Products search ads fell by 50%, and that incorporating ad relevancy into its auction model saved advertisers over $8 billion from 2021 to 2025 . It also noted that average cost-per-click for advertisers remained flat when adjusted for inflation during that same period .

"The FTC cherry-picked a small number of materials, such as a few online educational videos and training content that contained older or simplified examples about how our auctions are run," Amazon said in its statement .

## Staggering Impact

FTC Chair Andrew Ferguson said the scale of the alleged deception is "staggering." "Amazon has millions of advertising customers who were misled into paying significantly higher prices," he said. "These higher costs were largely passed on to American consumers" .

The lawsuit estimates that the scheme has extracted more than $20 billion from advertisers over the seven-year period . The FTC is seeking monetary relief, civil penalties, and an injunction to stop the alleged practices .

## A Familiar Battle

This is the third major lawsuit the FTC has filed against Amazon. In September 2025, the company agreed to pay $2.5 billion to settle allegations that it used deceptive practices to enroll consumers in Amazon Prime and made it difficult to cancel . Another case, in which the FTC accuses Amazon of illegally maintaining a monopoly in online retail, is scheduled for trial in early 2027 .

## Frequently Asked Questions (FAQs)

### 1. What exactly is Amazon accused of doing?

Amazon is accused of manipulating its online advertising auctions. The company publicly promised a "second-price" auction, where the winner would pay a small amount over the runner-up's bid. The FTC and states allege Amazon instead created hidden surcharges and used fake bidders to push the final price up, sometimes charging advertisers their full maximum bid .

### 2. How much money is involved in this case?

The FTC alleges the scheme has illegally extracted more than **$20 billion** from Amazon's advertising customers since 2019 .

### 3. How many advertisers were affected?

More than **1.2 million** advertisers were affected, including over **500,000 small and medium-sized businesses** .

### 4. Who is suing Amazon?

The lawsuit was filed by the Federal Trade Commission (FTC) and a bipartisan coalition of **22 states**, including California, New York, Texas, Florida, Illinois, and Washington .

### 5. What is Amazon's response?

Amazon has strongly denied the allegations. The company argues that its auction model prioritizes ad relevancy, not just the highest bid, and that advertisers have benefited from lower costs and better results under its system .

### 6. What is a "second-price" auction?

In a second-price auction, the winning bidder pays only slightly more than the next-highest bidder, rather than their own maximum bid. This is the type of auction Amazon allegedly promised to advertisers .

## The Bottom Line

The FTC's lawsuit paints a picture of a company that systematically broke its own promises to extract billions from its advertisers. Amazon's defense is that its system is more complex and ultimately fairer than the FTC claims. The case, which could take years to resolve, has already sent a clear message to the market: the scrutiny on big tech's advertising practices is only intensifying.

Fast-Fashion Giant Shein’s Shares Fall After Hong Kong Trading Debut That Spotlights Its China Roots

 

Fast-Fashion Giant Shein’s Shares Fall After Hong Kong Trading Debut That Spotlights Its China Roots

**Shein's long-awaited IPO ended with a whimper, as a lukewarm debut and a sharp valuation reset highlight the immense challenges facing the online retail giant.**

After a years-long, winding road to the public markets, fast-fashion behemoth Shein finally made its trading debut on the Hong Kong Stock Exchange on September 1, 2026 . The opening was far from triumphant. The stock listed at HK$48.56, in line with its IPO price, but quickly sank as much as 10% in early trading .

The muted reception marks a dramatic comedown for a company once valued at nearly **$100 billion** in private markets . With a market capitalization now hovering around **$26 billion** , the listing spotlights the erosion of investor confidence in a business model built on ultra-fast fashion and cross-border shipping—a model now under siege from all sides.

## A Tepid Debut

The first day of trading was a rocky affair. Shares dropped as low as HK$43.72 before staging a late-day rally . They finished the day at HK$48.50, a mere 0.1% below the IPO price, effectively erasing most of the day's losses but failing to deliver the typical "first-day pop" that often signals strong investor demand . The retail portion of the IPO was only 5.63 times subscribed, a lukewarm response compared to the hundreds of times oversubscription seen in other high-profile Hong Kong deals .

“Never been bullish on this IPO. Revenue's not growing, and a lot of the money raised is basically going back to the earlier investors,” said Dickie Wong, executive director of research at uSMART Securities .

## The China Roots Conundrum

A central theme of Shein's listing is its complex relationship with its country of origin. Founded in China in 2012 and headquartered in Singapore since 2021, the company spent years cultivating an image as a global entity . However, after failed attempts to list in New York and London and increasing scrutiny in the West, Shein ultimately pivoted to a Hong Kong listing, re-embracing its Chinese roots .

That pivot is not purely a matter of convenience. Shein's core competitive advantage—its ability to quickly manufacture and ship massive volumes of inexpensive clothing—is still deeply tied to the supply chain and manufacturing ecosystem of Guangdong province. Founder Sky Xu highlighted this in a February speech, stating, “Guangdong is Shein's roots, and the starting point of our journey” .

## Why the Fall? The Pressures on Shein's Business Model

Investor hesitancy is a reflection of the severe headwinds now facing Shein's business model, which rely on the foundation of low-cost, cross-border trade. The company's appeal was built on delivering ultra-fast, affordable fashion from China to the West within days. That advantage is now crumbling.

### Tariffs and Regulations

The most significant blow came when the U.S. scrapped the "de minimis" duty exemption for e-commerce shipments under $800, a policy that was the backbone of Shein's direct-shipping model . The EU has followed with similar fees on low-value packages . This is far from a Shein-specific problem, but a fundamental change in the economics of cross-border e-commerce. As one analyst put it, it is "the end of an era for cheap cross-border shipping" . In response, the company is expanding its third-party marketplace and even purchased US apparel brand Everlane in May to broaden its offerings .

### Falling Growth and Profitability

The financial results are already showing the strain.

- Revenue growth slowed to a crawl, with the company expecting first-half 2026 growth to be "broadly in line" with the sluggish 1.1% pace seen in the first quarter .

- Shein recorded a **$99 million loss** in the first three months of 2026 .

- Net income slid 39% in 2025 .

### Intensifying Competition

Beyond regulatory hurdles, Shein faces fierce competition from rivals like **Temu** and **AliExpress**, which are also vying for the same cost-conscious consumer .

## The "Capital-Structure Event"

Analysts note that the IPO was not just about raising new capital to grow the business. With much of the money raised being used to compensate early investors who bought in at higher valuations, the listing is more of a "capital-structure event" . The company agreed to pay up to **$3.5 billion in cash** and make share adjustments to certain preferred shareholders .

## What Comes Next for Shein and Hong Kong

Despite Shein's underwhelming debut, the IPO itself is welcome news for the Hong Kong Stock Exchange, which is experiencing a strong year for new listings . The exchange is on track for its best year for IPOs since 2010 . However, the "Shein moment" serves as a powerful reminder that the era of breakneck growth for some of the pandemic-era's biggest winners may be over, replaced by a new reality of tariffs, regulation, and relentless competition.

---

## Frequently Asked Questions (FAQs)

### 1. How did Shein's stock perform on its first day of trading?

Shein's shares closed at HK$48.50, down a fraction of a percent from the IPO price of HK$48.56. During the day, they fell as much as 10%, reflecting a volatile and tepid debut .

### 2. Why did Shein list in Hong Kong instead of New York or London?

Shein initially sought to list in New York and London but faced intense regulatory and political scrutiny in the West. Chinese authorities also ultimately blocked those attempts, leading the company to choose Hong Kong .

### 3. What is Shein's current valuation, and how does it compare to its peak?

At its debut, Shein's market capitalization is approximately **$26 billion**. This is a stark contrast to its private market peak of nearly **$100 billion** in 2022 .

### 4. What are the biggest challenges facing Shein?

The company faces a trifecta of challenges: the end of tariff exemptions in the U.S. and EU that powered its low-cost model, slower revenue growth and increasing losses, and intense competition from rivals like Temu .

### 5. Is Shein still a Chinese company?

Founded in China, Shein moved its legal headquarters to Singapore around 2021. However, its core supply chain and manufacturing operations remain heavily concentrated in China's Guangdong province .

---

## Disclaimer

*This article is for informational and educational purposes only and does not constitute financial, investment, tax, or legal advice. The information provided is based on publicly available data as of September 1, 2026. Stock prices, market conditions, and company performance are subject to change. Past performance is not indicative of future results. Before making any investment decisions, please consult with a qualified professional.*

Bond Sell-Off Threatens to Squeeze Borrowers Around the World

 

Bond Sell-Off Threatens to Squeeze Borrowers Around the World

## Government yields are hitting multi-decade highs, reflecting anxiety about debt levels, deficits and inflation. The effects will extend to mortgages, business loans and other types of credit.

There's a quiet crisis brewing in the world's financial markets, and it's about to make everything more expensive for everyone. Government bond yields—the interest rates that countries pay to borrow money—are surging to levels not seen in decades. And because these rates serve as the foundation for almost all other borrowing costs, from mortgages to corporate loans to credit cards, the ripple effects will be felt in household budgets and business balance sheets around the world.

The sell-off is being driven by a toxic mix of anxiety: **ballooning government debt levels, persistent inflation, and geopolitical chaos** that shows no signs of abating. Bond investors, often called the "bond vigilantes," are demanding higher returns to compensate for the risks they perceive. And they're getting them.

---

## The Global Picture: Yields Are Soaring Everywhere

The phenomenon is not confined to any one country. From the United States to Europe to Japan, government borrowing costs are climbing:

- **United States:** The 30-year Treasury yield surged to **5.33%** in August, its highest level since 2007. The 10-year yield has also climbed sharply, approaching levels not seen in years.

- **Europe:** Germany's 10-year Bund yield hit its highest since May 2011. France's 10-year yield reached a 17-year high. In the UK, 30-year gilts are nudging 6%.

- **Japan:** The 10-year government bond yield touched a **30-year high** of 2.955%.

This is a global phenomenon, not a localized problem. Investors are demanding higher compensation for holding sovereign debt across the board.

## Why Is This Happening? Three Converging Pressures

The bond sell-off is driven by a confluence of forces that show no signs of abating:

### 1. Soaring Government Debt

The U.S. national debt surpassed **$40 trillion** in August. The federal deficit is approaching **$2 trillion** annually. Investors are increasingly worried that governments are borrowing more than they can sustainably repay. When supply of debt increases without a corresponding increase in demand, prices fall and yields rise.

### 2. Persistent Inflation

The Federal Reserve's preferred inflation gauge, core PCE, has held at **3.3% in three of the past four months**—producing almost no net improvement since April. Global inflation remains stubbornly high, driven by energy shocks from the Iran war and persistent services inflation. As long as inflation stays above target, bond investors will demand higher yields to protect their purchasing power.

### 3. Geopolitical Chaos

The Iran war and the closure of the Strait of Hormuz have driven oil prices above $90 a barrel, reigniting inflation fears and pushing bond yields higher. The conflict has also disrupted global shipping and created uncertainty that makes investors nervous about holding long-term debt.

## What This Means for You: Higher Borrowing Costs Across the Board

Long-term government bond yields set the floor for borrowing costs across the economy. When they rise, everything else follows:

- **Mortgage rates:** With the 10-year Treasury yield near 4.7%, 30-year mortgage rates are well above **6.5%** and inching toward 7%. For a $400,000 loan, that's a monthly payment of roughly **$2,600**—before taxes and insurance.

- **Corporate borrowing:** Companies will pay more to issue bonds, which can slow investment and hiring.

- **Consumer credit:** Credit card rates, auto loans, and other forms of consumer debt will become more expensive.

- **Government interest costs:** The U.S. government is already spending **more than $1 trillion annually** on interest payments. Higher yields will only increase that burden, creating a vicious cycle where more borrowing leads to higher interest costs, which leads to more borrowing.

## A Self-Reinforcing Cycle

The bond sell-off is creating a debt spiral that could be difficult to break:

1. **Higher yields** increase the cost of servicing government debt.

2. **Higher interest costs** widen budget deficits.

3. **Wider deficits** require more borrowing.

4. **More borrowing** pushes yields even higher.

This self-reinforcing cycle is exactly what economists call a "debt spiral," and it's the scenario that keeps central bankers up at night. The Federal Reserve faces an increasingly difficult choice: raise rates to fight inflation and risk deepening the spiral, or hold steady and hope that inflation moderates on its own.

## What Comes Next

The bond market is sending a clear message: the era of cheap money is over. Whether this is a temporary adjustment or a long-term structural shift remains to be seen. But for now, the trend is unmistakable.

---

## Frequently Asked Questions (FAQs)

### 1. What is a government bond yield?

A government bond yield is the interest rate a government pays to borrow money by issuing bonds. When yields rise, it means the government must pay more to borrow.

### 2. Why are bond yields rising so fast?

Yields are rising due to a combination of factors: soaring government debt levels, persistent inflation, and geopolitical uncertainty—particularly the Iran war and the closure of the Strait of Hormuz.

### 3. How do bond yields affect me?

Higher government bond yields translate directly into higher borrowing costs for consumers and businesses. This means higher mortgage rates, more expensive car loans, higher credit card interest, and increased costs for businesses that can lead to slower hiring and investment.

### 4. What is the "debt spiral" risk?

A debt spiral occurs when rising yields increase the cost of servicing debt, which widens deficits, which requires more borrowing, which pushes yields even higher. This self-reinforcing cycle is a major concern for economists.

### 5. Is the U.S. at risk of a debt crisis?

While the U.S. can always print money to pay its obligations, the growing debt burden is forcing investors to demand higher yields. If left unchecked, this could lead to a debt crisis where borrowing costs become unsustainably high.

### 6. Will the Federal Reserve intervene?

The Fed is in a difficult position. Raising rates to fight inflation could make the debt spiral worse. Holding steady could allow inflation to persist. The path forward is uncertain.

### 7. What does this mean for global markets?

Higher U.S. yields suck capital from global markets, raising financing costs worldwide and putting pressure on emerging market currencies and assets. It's a global phenomenon with global consequences.

---

## Disclaimer

*This article is for informational and educational purposes only and does not constitute financial, investment, tax, or legal advice. All views expressed are based on publicly available information as of September 2026. Market conditions, interest rates, and geopolitical situations are subject to rapid change. The author does not endorse any specific investment strategies or products. Past performance is not indicative of future results. Before making any financial or investment decisions based on the content of this article, please consult with qualified professionals who can evaluate your specific situation.*

John Ternus Takes the Helm: Inside Apple's Leadership Shift

 John Ternus Takes the Helm: Inside Apple's Leadership Shift

**On September 1, 2026, John Ternus officially became only the third CEO in Apple's modern history, succeeding Tim Cook after a 15-year tenure that saw the company's value soar to over $4 trillion.**

## The Handoff

After more than a decade and a half at the helm, Tim Cook has officially stepped down as CEO of Apple. His successor is John Ternus, a 25-year Apple veteran who was most recently the company's Senior Vice President of Hardware Engineering . This transition, announced back in April 2026, represents the culmination of a carefully planned succession process .

Cook isn't leaving entirely. He remains at Apple as Executive Chairman, a role that includes "engaging with policymakers around the world"—a crucial function given the company's complex global supply chain and relationship with the Trump administration . In his new position, Cook will continue to assist the company while working closely with Ternus on the transition .

During Apple's July earnings call, Cook called Ternus "one of a kind" and expressed confidence the transition would go "seamlessly" . Arthur Levinson, who was Apple's non-executive chairman, will now become Lead Independent Director, while Ternus joins the board effective immediately .

## Who Is John Ternus?

Ternus, 51, is not a Silicon Valley outsider. He's a mechanical engineer who has spent his entire career in product design and hardware development . He joined Apple's product design team in 2001, working initially on the Cinema Display, and steadily climbed the ranks to become Vice President of Hardware Engineering in 2013, then Senior Vice President in 2021 .

His engineering background sets him apart from Cook, whose expertise was operations and supply chain management. Ternus shares more in common with Apple's first modern CEO, Steve Jobs, whose focus was always on product . As one report noted, Ternus is "a career product guy" taking the helm after "an operations guy" .

But while he may have a product-focused mindset, his style is distinctly different from the "design over functionality" approach that sometimes characterized Jony Ive's later years. Those who've worked with him describe him as approachable and detail-driven, known for listening and collaborating rather than commanding the room .

## The Hardware Legacy

Under Ternus's leadership in hardware engineering, Apple's product teams pushed out generation after generation of iPhone, engineered the historic shift to Apple Silicon (which reinvigorated the Mac lineup), and turned AirPods and other wearables into major sellers .

His fingerprints are all over Apple's current lineup. He oversaw the development of the iPhone Air, the razor-thin titanium phone introduced with the iPhone 17 series, as well as the MacBook Neo, Apple's most affordable laptop that blends colorful design with the A18 Pro chip . He is also credited with executing the complex hardware of Apple Vision Pro, a device that integrates dual micro-OLED 4K displays, custom R1/M-series chips, and spatial audio arrays into a single wearable immersive headset .

Perhaps most significantly, Ternus spearheaded the transition from Intel processors to Apple Silicon, ushering in a generation of whisper-quiet laptops that blend fast performance with long battery life—a combination Windows laptops still struggle to match .

## What Comes Next

Ternus faces significant challenges that will force him outside his comfort zone. Beyond keeping Apple competitive in the artificial intelligence race, he must navigate supply chain questions and relationships with figures like President Trump, who offered public praise for his predecessor on Tuesday .

His first major test comes almost immediately. On September 9, Ternus is expected to make his first public appearance as CEO at Apple's annual launch event, where the company is expected to unveil the next generation of iPhone, likely the iPhone 18 Pro series and a foldable iPhone .

Internal reports suggest Ternus has been re-elevating the role of Apple's industrial design team—a group that lost influence after Jony Ive's departure in 2019, when design oversight shifted to operations executives . In internal meetings, he reportedly told the design team: "The most beautifully designed thing that most customers own is an Apple product. We're going to make sure that stays the case" .

## A Seamless Handoff

Despite the change at the top, analysts don't expect a sudden pivot. As one observer noted, Ternus is "not an outsider with wild anti-Apple ideas intended to wake a sleeping giant. He's been here for decades, through all the major releases that made Apple, well, Apple" .

The handoff is more like a relay race: Cook continues to pace the track while holding out the baton. Ternus is nearby, running just behind, with one hand outstretched. The handoff happens now, with everything still in motion.

---

## Frequently Asked Questions (FAQs)

### 1. Who is Apple's new CEO?

John Ternus, Apple's former Senior Vice President of Hardware Engineering, officially became CEO on September 1, 2026, succeeding Tim Cook .

### 2. What happened to Tim Cook?

Tim Cook stepped down as CEO but remains at Apple as Executive Chairman. In this role, he will assist with the transition and engage with policymakers around the world .

### 3. What is John Ternus's background?

Ternus is a mechanical engineer who joined Apple in 2001 as a product designer. He worked his way up to Vice President of Hardware Engineering in 2013 and Senior Vice President in 2021. He has been involved with nearly every major Apple product, including the iPhone, iPad, Mac, AirPods, and Apple Watch .

### 4. What will Ternus do as CEO?

Ternus will lead Apple's product strategy, including the company's push into artificial intelligence. He is also focused on restoring the authority of Apple's industrial design team and overseeing the development of new products like a rumored foldable iPhone .

### 5. When will Ternus make his first public appearance as CEO?

Ternus is expected to appear at Apple's September 9 product event, where the company is likely to announce the iPhone 18 Pro series and other new devices .

---

## Disclaimer

*This article is for informational and educational purposes only and does not constitute financial, investment, or business advice. The views expressed are based on publicly available information and analyst commentary as of September 2026. Apple's strategies, product plans, and leadership transition are subject to change. For the most current information, please consult official Apple communications. The author is not affiliated with Apple Inc. or any entity mentioned in this article.*

China's Manufacturing PMI Rebounds in August — What It Means and What Still Holds It Back

 China's Manufacturing PMI Rebounds in August — What It Means and What Still Holds It Back

China's factory activity showed a welcome sign of improvement in August. The official manufacturing Purchasing Managers' Index (PMI) rose to **49.8**, up from 49.2 in July . The increase of 0.6 percentage points signals a real, if still fragile, recovery in business sentiment .

A reading below 50 still indicates contraction, but the move is in the right direction. After a disappointing summer, the data suggests the world's second-largest economy may be finding a floor.

## Behind the Headline Number: A Look at the Sub-Indexes

The headline PMI only tells part of the story. The real insights come from the sub-indexes, which reveal what's working and what still isn't.

### The Good News: Production and Demand Are Back in Expansion

For the first time in months, both supply and demand are expanding:

- **Production Index:** Rose to **50.4** (up 0.5 points) 

- **New Orders Index:** Jumped to **50.6** (up 2.1 points) 

The new orders figure is the most important. A 2.1-point jump indicates a meaningful pickup in market demand after months of weakness. This improvement is being driven by two key factors:

1.  **Policy support:** Infrastructure spending and other economic measures are beginning to show results .

2.  **Weakening weather effects:** The extreme heat and storms that disrupted activity in July are fading, allowing normal business to resume .

### The Mixed News: The Recovery Is Uneven

The rebound isn't being felt evenly across the economy:

- **Large vs. Small Companies:** Large enterprises saw their PMI rise to **50.6**, returning to expansion . In contrast, small enterprises remained deep in contraction at **47.9** .

- **High-Tech vs. High-Energy:** The "new economy" is thriving. Equipment manufacturing (51.4) and high-tech manufacturing (52.9) are firmly in expansion . Meanwhile, the high-energy-consuming industries are struggling at 47.9 .

### The Warning Signs: Margin Squeeze and Labor Weakness

Two concerning trends stand out:

- **Rising Input Costs:** The index for raw material purchase prices surged to **56.6** . This is driven by higher global oil and metal prices, which could squeeze corporate margins.

- **Falling Factory Gate Prices:** The factory price index sits at just **50.4** . This is barely in expansion mode, indicating that companies are finding it very difficult to pass on higher costs to consumers.

- **Weak Employment:** The employment index dropped to **48.7** . This suggests that despite higher production and orders, companies are not yet hiring in a meaningful way.

## The Bottom Line

The August PMI data is a welcome relief for policymakers. It suggests that their support measures are starting to work and that the economy is stabilizing after a rough patch. However, the recovery is still fragile. With the index stuck below 50, a significant part of the economy is still contracting, especially small businesses. The path back to a full, sustainable recovery remains a work in progress.

---

## Disclaimer

*This article is for informational and educational purposes only and does not constitute financial, investment, tax, or legal advice. The views expressed are based on the analysis of publicly available information. Economic conditions and data are subject to change. Before making any decisions, please consult with qualified professionals.*

Business Groups Urge Swinney to Scrap ‘Ineffective’ Food Price Cap Plan

 

Business Groups Urge Swinney to Scrap ‘Ineffective’ Food Price Cap Plan

**Twenty-three industry organisations representing 300,000 workers across Scotland have written to the First Minister, warning that the SNP's flagship policy will increase costs and cause market disruption .**

The Scottish government's proposed statutory price cap on essential food and drink items is facing its most significant challenge yet. On August 30, 2026, a coalition of 23 business groups sent a joint letter to First Minister John Swinney, urging him to abandon the plan just before he sets out his Programme for Government .

The signatories, including the Scottish Retail Consortium (SRC), the Food and Drink Federation Scotland, the National Farmers Union of Scotland, and Dairy UK, have warned the policy is “unnecessary, ineffective, and likely to deliver significant adverse consequences” .

## The 'Ineffective Gimmick' Argument

The business groups argue that a statutory price cap would fail to tackle the real drivers of high food prices. They point to rising production, refrigeration, and distribution costs, as well as global supply chain shocks caused by the wars in Ukraine and Iran .

Ewan MacDonald-Russell, deputy head of the SRC, described the plan as an “appallingly terrible idea,” arguing, “Price caps don't tackle food price inflation. They are not a solution, they are a gimmick that sounds quite effective, but it just displaces cost elsewhere” .

The groups warned that the cap could actually **increase** household costs. They argue that by forcing stores to sell staple items at a loss, retailers will be compelled to recoup the cost elsewhere, either through higher prices on other products or by sourcing cheaper goods .

## The Hungarian Precedent

Critics have pointed to the example of Hungary, where a similar policy introduced in 2022 under Viktor Orbán led to unintended consequences . According to the SRC, the Hungarian price cap resulted in:

- Shortages of some foods on shelves

- Tensions and abuse between customers and shop staff

- An influx of “cheap imports” at the expense of domestically-produced food

- The policy was eventually found to be unlawful by Hungarian and European courts .

## Unintended Consequences for Small Shops

Independent retailers have expressed concern that the cap would place them at a severe disadvantage . The proposals are understood to apply only to large supermarkets, meaning that convenience stores and corner shops—which are not covered by the legislation—would be unable to compete with the artificially low prices .

Luke McGarty of the Scottish Grocers’ Federation warned that the policy “could encourage customers to travel further to out-of-town locations for staple goods typically purchased locally,” reducing the sustainability of local stores .

## The Industry Letter: A United Front

The joint letter was submitted to the First Minister last Thursday, 27 August, and has been signed by leaders across the food supply chain .

> *“We jointly believe the mooted statutory food price cap is unnecessary, ineffective, and likely to deliver significant adverse consequences. The effects will be to increase, rather than decrease, the cost of household goods.”*

> — Joint Letter from 23 Business Organisations 

## The Government's Defense

Despite the mounting pressure, First Minister John Swinney has stood by the flagship policy, which was a key SNP manifesto pledge . He has insisted the plans “remain as they were set out in the manifesto” .

Swinney has framed the policy as a public health intervention, arguing that the cost of living crisis is impacting the nation’s nutrition . Speaking to the Press Association, he stated, “I’m keen to make progress on an issue that is causing real hardship for members of the public” .

A Scottish Government spokesperson said that helping people with the cost of living was a “top priority,” and a consultation on the proposals will launch shortly .

## Frequently Asked Questions (FAQs)

### 1. Who signed the letter against the food price cap?

Twenty-three organisations signed the joint letter, including the Scottish Retail Consortium, the Food and Drink Federation Scotland, Dairy UK, Scottish Bakers, the National Farmers Union of Scotland, the Scottish Grocers' Federation, and the Association of Convenience Stores .

### 2. Why are business groups opposing the cap?

They argue it is “ineffective” and will not address the root causes of high food prices, such as global energy costs and supply chain shocks. They also warn it could lead to food shortages, increase prices on other goods, and harm small businesses .

### 3. Does the Scottish Government have the power to introduce a price cap?

The Scottish Government believes it can do so under public health provisions. However, the policy would likely require changes to the UK Internal Markets Act, or a deal with Westminster, to prevent trade barriers between Scotland and the rest of the UK .

### 4. What are the risks of the policy?

Industry leaders have warned of a range of risks, including food shortages, unintended price increases on other goods, a competitive disadvantage for small retailers, and tensions between customers and shop staff .

### 5. What is John Swinney's current stance?

John Swinney has insisted his plans for the price cap remain unchanged. He maintains that the policy is a necessary intervention to help families struggling with the cost of living .

Türkiye’s Economy Holds Up Despite Iran War, Tight Policy

 

Türkiye’s Economy Holds Up Despite Iran War, Tight Policy

**Turkey's economy grew 2.3% in the second quarter of 2026, defying expectations of a sharper slowdown caused by the Iran war and tight domestic monetary policy .**

Turkey's economy has shown surprising resilience. Despite the shock of the Iran war and the drag of a tight monetary stance, the country recorded a 24th consecutive quarter of economic expansion . The 2.3% year-on-year growth in Q2, while softer than the previous quarter's revised 2.6%, beat the worst-case predictions .

The key takeaway from the data is that **exports have acted as a crucial buffer, offsetting the negative impacts of the conflict** .

## A Tale of Two Forces: Weaker Demand, Stronger Trade

The quarterly growth figure reveals two opposing forces at work in the Turkish economy:

### 1. Domestic Demand is Cooling

The central bank's tight monetary policy is having its intended effect. Domestic demand is slowing, as shown by the declining share of imports and weaker non-energy import data .

While household consumption increased 3.5% from a year ago, this was down sharply from 5.1% in the first quarter . Investment also slowed, with gross fixed capital formation growing just 0.6%, compared to 3.1% in Q1 .

### 2. Exports Are Stepping Up

The conflict in the Middle East, which sent energy prices soaring and the Strait of Hormuz into turmoil, also opened a window of opportunity for Turkish exporters .

The central bank noted that supply chain disruptions prompted some buyers to shift orders toward Turkey . This resilience, alongside strong growth in the defense sector, helped exports remain robust. This allowed the foreign trade balance to improve in the second quarter despite a 32.4% jump in energy import costs .

## The "Odd Couple": Slow Growth and Rising Inflation

The strongest evidence of the Iran war's impact is on prices. The central bank itself has said the conflict delayed the disinflation process . Annual inflation, after briefly stalling, eased slightly to 32.1% in June .

The central bank warns that the war has created significant "upside risks" for inflation . Official forecasts remain grim, with the year-end 2026 inflation target raised to 24%, up from 16% before the war began .

**"Recent uptick in underlying inflation poses upside risks for near term inflation."**

— **CBRT Governor Fatih Karahan** 

## The Outlook: A Precarious Balance

The data shows the Turkish economy is walking a tightrope. The government's tight monetary policy, which has kept the benchmark rate at a high 37% , is successfully cooling domestic demand and supporting the lira. This in turn has helped keep the current account deficit more manageable than initially feared .

However, the policy has not yet conquered inflation, which remains over 30% . Furthermore, the CBRT's efforts are complicated by market expectations. A recent central bank survey showed the market expects year-end inflation of 29.21% and a further depreciation of the lira to 51.55 per dollar .

Most economists see the 2.3% GDP figure as a sign of resilience, but it is a resilience born of high inflation and an export boost from a war. The central bank now expects growth to cool further to around **3.1%** for the full year , with BBVA Research nowcasting growth of around 3% for the third quarter .

## Frequently Asked Questions (FAQs)

### 1. How is Turkey's economy performing despite the war?

Turkey's economy grew 2.3% in the second quarter, supported by strong exports that offset the negative impacts of the conflict and tight policy .

### 2. What is the biggest threat to Turkey's economy?

The biggest threats are persistently high inflation, which remains above 30%, and the risk of further geopolitical escalation in the Middle East .

### 3. How did the CBRT respond to the war?

The central bank paused its easing cycle and maintained a tight monetary policy, holding its benchmark rate at 37% .

### 4. Is Turkey's central bank planning to cut rates?

Analysts expect the central bank to begin gradually easing policy from September, but they are proceeding cautiously due to high inflation and expectations .

### 5. What are the forecasts for Turkey's growth in 2026?

Economists forecast full-year growth of around 3%, with Q3 nowcast at 3%, but risks remain from the conflict .

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## Disclaimer

*This article is for informational and educational purposes only and does not constitute financial, investment, tax, or legal advice. The information is based on publicly available data and reports as of August 31, 2026. Market conditions and forecasts are subject to change. Before making any decisions, please consult with a qualified professional.*