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Sophie Hatter lives in the land of Ingary, in the town of Market Chipping, which obeys all kinds of fairytale rules.
As the eldest daughter of three sisters, she is sure that she is doomed to failure, since it's always the youngest kid who has all the luck in fairytales (think the non-Disney versions of Cinderella or Beauty and the Beast).
But nobody else has quite Sophie's grim view of things.
Her stepmother treats her well, her father sends all three of his daughters to school, and generally her life does not seem to be obeying the usual fairytale clichés.
Still, other fairytale things do happen: the Witch of the Waste threatens the King's daughter and (apparently) kills the King's personal magician, the Wizard Suliman.
A few months later, a moving castle appears in the hills above Market Chipping, making everyone nervous.
The moving castle belongs (of course, as the title promises: Howl's Moving Castle, right, guys?) to the Wizard Howl, who is supposed to eat the souls of girls.
Suddenly Mr. Hatter dies, leaving the hat shop with a ton of debt.
Fanny (Sophie's stepmother) has to pull the three girls out of school.
Fanny gets Lettie an apprenticeship at a local pastry shop, while Martha gets to go study with a witch named Annabel Fairfax. Lucky Martha?
As for Sophie, she becomes Fanny's apprentice at the hat shop.
As Sophie sits on her own trimming hats, she starts to talk to them—that's how lonely she is.
She tells the hats that they show youth or mysterious allure.
She hears rumors that the King has had a fight with his brother Prince Justin, who has disappeared.
Sophie decides to go out to Lettie's pastry shop on the holiday of May Day, but she has grown so nervous and unused to people that the crowds really frighten her; a young guy tries to hit on her, but Sophie is too nervous to respond.
The pastry shop where Lettie is working is super busy of course, what with Lettie being famously beautiful and it being a holiday and all.
Lettie takes a brief break, hands Sophie a cream cake, and then breaks the news: she's not actually Lettie, she's Martha.