So there I am, channel surfing in the living room, when Lester Holt tells me that the cost of groceries is "soaring." He throws to Stephanie Ruhle, who reports that there's "sticker shock" in the grocery aisle and then interviews a guy who says his grocery bill has doubled. That's followed immediately by a graphic showing that the price of eggs and hamburger has gone up 7%.
"Soaring food prices" is an evergreen staple of the nightly news, but this is sure an odd time to focus on it. Here is the inflation rate of food adjusted for overall inflation:
Last summer, the cost of food really was soaring: prices were up 4.8% above the overall rate of inflation. But that's been falling ever since. In March, the cost of food was only 0.7% above last March after you adjust for overall inflation—surely no one's idea of "soaring." What's more, wages have been increasing right along with prices. As a percent of the average wage, the cost of food is lower than it was last year.
(And in case you think I'm cheating by not showing the 2-year average inflation rate that I extolled this morning, it's the gray line in the chart above. If you use that, food inflation in March was essentially zero.)
Bottom line: By almost any measure you can think of, food inflation is quite moderate. Maybe that will change in the future, as many are predicting, but there's really no excuse for pretending that grocery prices are soaring right now.
I've been having the impression grocery prices were actually down noticeably the past month or so.
That's not the kind of story they want!
So increases in food prices, adjusted for overall inflation was only 0.7 percentage points higher than inflation as a whole?
I have noticed alot of stores are avoiding sales, but others are back to normal.
Seems more like there's market-capture going on than inflation, anyhow. Or good ol' supply-and-demand.
The cynic in me says the Ruling Class is a little concerned about the possibility of higher taxes to pay for infrastructure. Best to get the peasants riled up against that ASAP.
Hmm, ya think?
Or it's just reliable clickbait.
Or perhaps they didn't get that memo.
But Nat-C strongman Josh Hawley told me corporations are woke now.
Why correct for overall inflation? I makes no sense to me. What people see in the store are real prices, not corrected prices. The question is not "do food prices rise faster than other prices?", the question is simply "do food prices go up?"
The graph shows that food prices have risen faster than overall inflation for two years now. It also shows that this is likely coming to an end shortly. So it is odd for Lester Holt to bring this up now. But for two years food prices have been drivers of inflation, so it is not unreasonable to cover the topic.
My own observation is that some prices have gone up (grains, flour, legumes) and others not so much or not at all (dairy, except for imported cheese of course).
General rule: Correct everything for inflation except inflation!
I think the point is that, if the headline claim is "food prices are soaring," it's appropriate to look at how fast food is going up compared to everything else. And if the answer is "not much," then the story is bogus. Especially when prices in general are not really soaring, as Kevin has taken pains to tell us.
You'd assume that guy's grocery bill would have gone down, not "doubled", since he no longer has to buy bales of toilet paper and barrels of bottled water.
In response, I think we must heed the advice of Ol' Dirty Bastard & NOT EAT THE FOOD.
The other day I mentioned that there is a possibly misleading effect on year/year inflation when there is a one-time jump in prices. This actually happened with food/beverage prices, as they ramped up in April-June last year and haven't come down:
https://fred.stlouisfed.org/series/CPIFABSL
Thus the elevated rate that Kevin's graph shows for the last year is actually an artifact - the real higher inflation was something that happened only for a few months early last year. Probably the year/year rate will continue to come down through June of this year just for this (artificial) reason. But Kevin is right that the food/beverage CPI has not shown a rise this year - the media stories on inflation do tend to be silly sometimes.
Supply chain disruptions have raised prices when going to the grocery store. And as things start to re-open and some normalcy returns, that will also disrupt the supply chains. And typically, prices come down slower than they go up--competition has not fully returned either.
Note, I said groceries, not just food. Toilet paper is slowly returning to normal. Cleaning supplies are also showing up on the shelves now. Cereals and canned beverages are still running relatively high. Covid outbreaks had disrupted some harvesting and/or meat packing, and that has raised prices.
Ordering take out also means paying a little more.
If prices go up , esp. on something specific you buy regularly, you'll notice. Prices dropping on other general items, meh.... And a given jump, even if prices quickly stabilize, sticks in the craw for a while. So yes, prices are up, people notice, but it is not a crises as is portrayed. There is no run away inflation.