Why do so many people still think inflation is high? It's because they don't respond to averages. They respond to outliers.
The cost of groceries, for example, has risen only 1% over the past year. In February food inflation was negative. And yet, 55% of Americans still say they worry about inflation a great deal. It remains the top concern in the most recent Gallup poll.
One reason for this is that although food inflation might officially be at 1%, that's an average. Here are the top 15 gainers:
Frozen juice is up 27%. Baby food is up 9%. Ground beef is up 6%. When you shop for groceries, these things are going to stand out.
Now, it's also true that eggs are down 17%. Apples are down 10%. Fruits, vegetables, chicken, and dozens of other items have been flat. But you don't really notice that. You notice the occasional item that's way higher than it used to be.
And the fact that frozen juice is up largely because of an orange disease in Florida combined with a poor southeast Asian sugar crop? Not one person in a thousand knows that or cares about it. Their mindset is still fixated on inflation, so they see the high price of Minute Maid and automatically blame it on inflation.
That mindset will wane over the next few months as overall grocery bills stay flat for awhile. Until then, if even a few popular items have big price increases lots of people will think inflation is still surging.
Note also, confirmation bias. People notice and give weight to things that confirm their prior beliefs, while they don't notice or discount things that don't. Prices might be down generally, and that might be reflected in reductions in a dozen different items, but if I think prices are rising, I'll notice only the one that's gone up.
And then there's the general attitude that increases in income are earned, while increases in prices -- even if they're less -- are an unfair imposition.
For now. A new bird flu outbreak has already led to the culling of 1.6 million hens.
Funny, in the Seattle Times back in December there was an article about the WA State AG successfully suing a number of major egg producers for overcharging consumers. Cost them a bit over $40 million - to be paid out to lower income consumers. I think there's still one producer in his sights. Apparently the overcharging had been going on for quite a while - but they got greedy and careless.
Their problem was that they had "loose lips". They were justifying large price increases based on bird flu losses, but telling their shareholders that they were making huge profits. The discrepancy was duly noted.
I did a quick search at the time and it seems our AG was not alone in noticing the signs of price gouging. I saw mention of a number of cases brought by other state AG offices.
Our AG also nailed some salmon harvesters too.
When people say they're unhappy about inflation, they don't mean that they're upset that food costs more now than it did last year. They mean that they're upset that food costs more now than it did for most of their lives. Say you're 40 now and you've been responsible for buying your own groceries since you were 25. For about 10 years, the prices of food only changed a little bit. Now all of a sudden everything costs a lot more! If it stops going up it still costs way more than it did for the rest of your adult life. It will take a while to get used to the new prices, and people aren't used to them yet.
Here's a personal example -- when I was in high school circa 1990, we would go to the Eckerd Drug and buy a 12-pack of soda for $2.99 and smuggle it in to the bowling alley with us, because that was a good price. Until covid, I could still reliably get a 12-pack of soda on sale for about $3; sometimes maybe it was $3.50 or even $4, but for 30 years the price was basically unchanged. Now the full price is more like $9. It doesn't matter that it was also $9 last year and the year before that. The emotional reaction is to the big jump, even if that was more than a year ago.
bingo!
Some of this is climate change having some big effects (drought and heat waves on cattle), some of it were supply chain disruptions and companies being slow to lower prices once bottlenecks clear...
Thanks, that seems to be the way people think.
Now the full price is more like $9.
This highlights a different fallacy: using list prices rather than the price you would actually pay. At least around here, the list price for a 12-pack of on-brand soda is about $8. However, it is always the case that a significant number of the 12-packs are "on sale" for anywhere between $4 and $6.
If you are completely devoted to one specific brand of soda, you'll pay $8 whenever that's not a brand that's on sale. But, if you're prepared to be flexible, you can buy a 12-pack every week and never pay anything like that price.
Amusing anecdote: there was a two week stretch last year when I could buy a 12-pack of Dr. Pepper products for $4.99, or I could buy a 24-pack for $12.99. I tried to figure out whether this was a psychology experiment.
Plus there's also the matter that some people think that inflation is another word for high prices. When inflation moderated in the early 80s, shoppers in stores interviewed for one news program said basically, 'What do you mean inflation is down? Prices haven't gone down.'
Then there are all the times over the years I've seen newscasters stating that 'inflation went up again last month' when the latest inflation figures are released, even if inflation was lower than in the previous month. People are conditioned to think that higher inflation means higher prices, period, rather than the more complex idea of a faster rise in prices than in the previous period.
And there is a large Conservative commentariat who mutually reinforce the mistaken concept that food inflation is "of course" high right now. That is probably a big chunk of the 55% who worry about inflation a great deal.
The prices that annoy me are for basic items. A gallon of distilled water (I have allergies and do saline irrigation) from Kroger used to be 89-99 cents and is now $1.49; the Target brand saline packets were around $9 per 100 and topped out at $15, although last time they’d dropped to $11.79. Canned sodas were $7/box of 12 and frequently were on sale for half that if you bought several; now the base price is $10/box and the sales are less frequent. Store-brand bread is still up 30-40% overall.
That said, fresh foods seem closer to their previous price scales, and I understand it’s a first-world problem. It’s aggravating, though.
You can make your own saline (I used to do this):
https://myhealth.alberta.ca/Health/pages/conditions.aspx?hwid=hw67090
Pickling or canning salt is not iodized and is free of other additives, generally, but check labels.
Probably why he's buying distilled water?
Yes, I’ve made it before, although I still prefer the packets. It’s not even a can’t-afford thing so much as an annoyance (another first-world gripe: the packets are smaller and harder to tear neatly)… there’s no real reason for this stuff to have gone up 50% at all, much less hover at a 30%+ increase. I think dambr1490 got it right above— prices on a lot of things still seem higher than the market warrants, and the overall feeling is that this is a calculation of profitability alone.
Soda prices vary widely. Here in the SF Bay Area I frequently see $10 for a box but discounted to $5 if you buy 4. You feel like an idiot if you only buy one but 4 seems ridiculous. But since I’m older, it still feels cheap. When I was a kid in the 60’s a bottle/can of coke was a dime. That works out to about 90 cents adjusted for inflation. So in my mind soda is still a bargain.
In my neck of the woods a half-rack of soda is about $7, up from about $6 in the before times.
But why the fuck is water so much more expensive?
...and I just bought 5 12 packs for $19.89 at Safeway. But only if I could plunk down $20 and have a place to put five cases. They were $9.99 otherwise.
It's nuts.
There is no significant difference in the costs of soda and bottled water. The prices of soda and water are also subject to supply and demand in an oligopolistic market where just a few brands compete.
Since we have another outbreak of bird flu beginning, look for eggs and chicken to start to rise again. It's all Joe Biden's fault!
Actually, it is spread by migratory birds. So either illegals from Canada or criminal birds with calves the size of apes from Mexico!
Criminals trying to kill us!!!!!
Frozen juice has been at an insane price for ages. For the last decade, I've been able to buy a bag of limes for less than the same amount of frozen limeade.
It's weird, but I guess you need freezers, processors, and they take money to operate when there's a fresh supply on trucks competing it's hard.
The above commentary is pretty good: lower price expectations (which mostly won’t happen), hangover effect, but especially the power of propaganda and self-belief. The self belief is important, the latest Gallup poll shows the belief of certain things that are factually inaccurate. Psychologically speaking, people don’t want to admit to themselves that they are wrong.
I understand inflation and know that price increases have moderated. I'm still trying to get over the big increases from the prior years.
Is it time to question the wisdom of crowds hypothesis? Given the hypnosis that modern hi-def TV controlled by selfish monsters like Rupert Murdoch induces in the cruder parts of the human brain, is it possible for "the group" to act in ways that are of long-term benefit to society and the environment?
Maybe Huxley was right. For the middle 1/3 of the Twentieth Century -- from the beginning of Roosevelt's administration to the end of Johnson's -- the US was functionally ruled by the "Alphas" of its society while the Betas and down acquiesced because they had been sufficiently well educated to understand and support the principles of Good Government to which most of the Alphas subscribed.
Those days are long-past and will never return because the lower strata of society have been corrupted by the baubles the stupid but powerful rich dangle in front of them and vote against their best interests.
If Faux News tells America that food prices are bankrupting them because of the IRA and scream about frozen orange juice prices as proof and the rubes take the con, they deserve to get what's coming, as Mencken put it, "good and hard".
Have you seen Fox News headlines recently?