Management Accounting for Inflation in the Multiple Food Retail Industry

Abstract

Introduction The debate on accounting for inflation has dwelt, almost wholly, on the presentation of published accounts, ignoring the implications for management accounting. This is surprising really. The distortions which inflation brings to our measurements are more immediate and decision‐affecting than the once a year public relations exercise of the annual accounts. The subject did get an airing in the Guidance Manual to ED18 but even there it was a technician's manual with no examination of the wider effects. This article (which has no academic pedigree) examines the effect of inflation on the compilation, presentation and interpretation of management information in the multiple retail food industry, i.e. in supermarketing. While not sharing the profundity of the learned debate on ED18 and Hyde, it deals with matters which immediately affect the company's health and where it most certainly does matter that inflation is reckoned with. Accountants in industry and commerce know they must account for inflation in their management accounting—a certainty of purpose lacking in our options in the published accounts. Perhaps if there was more discussion on how inflation affects day to day management decisions—and thereby how it is worked into the information leading to these decisions—then the whole debate might be a bit more real, and not as seems to many accountants in industry, on the edges of their accounting responsibilities.

Citation

Millar, J.L. (1978), "Management Accounting for Inflation in the Multiple Food Retail Industry", Management Decision, Vol. 16 No. 8, pp. 510-517. https://doi.org/10.1108/eb001178