Food Prices Are Soaring Faster Than Inflation and Incomes
bloomberg.com
bloomberg.com
https://tradingeconomics.com/commodity/baltic
Also, in case anyone thinks the current environment is crazy then check out the commodities bubble period of 2008 for that index.
The US Dollar Index was at 120 in early 2002, and then proceeded to fall persistently until the middle of 2008 when it rested at around 71. An epic collapse by the dollar that triggered all sorts of nasty global effects. Fortunately this time around the dollar drop hasn't been so bad, most major currencies are debasing at the same time. The dollar is merely back to where it was in 2015 and 2018, so far.
Ex: Bitcoin stocks (yes they're stocks / investment products) are only really reported on when they're at an all-time high. They may go up a little more if you're reading something fresh off the press, but it's not going to go up as much as it already has. I mean if you bought a year ago you could have had a 10x return on investment, if you invest now it'll be 10-20% return on investment at best.
CPI is absurd, it only perpetuates consumerism and punishes savers. We product 2x the food society consumes - mostly wasted away, just with some supply chain efficiency - there's a lot more room for food not to be expensive though.
Okay okay back up.
The consumer price index is a series of numbers designed to help people understand what dollar-denominated figures mean to ordinary people going about their lives, spending those dollars. If that's "consumerism," well yes, it's a portrait of consumerism.
Many economists, mind you, believe CPI doesn't correct quite enough, and suspect that it overstates the inflation it hopes to measure by around 1%. This is because it tracks the actual prices of a certain "market basket" of goods with specific products in it, and that basket gets out of date, as people substitute products.
But if someone's "punishing savers" and "perpetuating consumerism", it's not the index, and it's not the people compiling the index, and it's not the people trying to make the index more accurate by adjusting for quality. Assign the blame where it's due. You have a beef with the Federal Reserve, and possibly with other agencies or laws which refer to the CPI to make policy.
To professional economists, it can be infuriating to read (I imagine similar as medical professionals reading antivax blogs/comments, or radio engineers reading about dangers of 5G radiation).
I had a good intention once, to write layman exposition to clear most of the misconceptions. But much like the calculation of the CPI itself, it's a lot of work and ultimately not very rewarding. An unfortunate fact is that a very large part of the CPI comes from household survey responses. These are too expensive for non-professionals to reproduce and verify independently, so probably no amount of writing can really convince CPI-doubters.
"My cost of living has doubled but your saying everything is fine since the CPI has only gone up %3!!!" and general 'let them eat cake' style behaviors saying that iPads are 'so much cheaper'[0] is the general feeling I get.
[0] https://www.reuters.com/article/us-usa-fed-dudley-ipad/ipad-...
My layman understanding of inflation is that it is the measure of change of purchasing power a unit of currency has over time. I think most laymen, including myself, questions how this rather theoretical concept is actually measured in real life. Eg. I think it is a sensible expectation that if inflation was said to be 2% for 20 years then I should be able to buy a house that cost $200K 20 years ago for ~$300K now. This expectation is worlds away from reality which then prompts people to question the way inflation is measured.
I know you wrote that you don't really have the inclination anymore to educate on the topic but I for one would be grateful for any pointers how to explain the above discrepancy?
Uh no, housing is 32% of the CPI.
Source : https://arbor.com/blog/how-does-rent-factor-into-the-consume...
It doesn't track well with the experience of people on this forum because young professionals tend to live in cities with crushing rental markets, especially Silicon Valley. But the whole country, particularly thoseliving in houses not in New York or California, have a different experience.
This, of course, makes it wildly inaccurate.
It's done an absolutely terrible job for the past 15 years, for my lifestyle and where I live. I suspect it hasn't reflect many other people's budgets either, hence the common argument of official CPI figures being nonsense.
I don't even have to look at anything other than the changing health insurance premiums/deductibles/co pays/out of pocket maximums to prove it, not to mention real estate, childcare, taxes, and education. It eviscerates any downward effect tech products and grocery prices might have.
I used to have insurance co-payment, a deduction from my paycheck, and an unreachable out-of-pocket maximum. All of that has changed.
I used to pay about $1200 rent for a crummy house in a dangerous neighborhood. Now, with a paid-off mortgage, I pay just $266 for property tax on a house that is 3109 square feet on 0.39 acres.
Childcare is my wife, so $0 then and now. Income tax remains $0 due to child deductions. Sales tax is about 7%, relatively unchanged.
Education is a new expense compared to 15 years ago when nobody was in school. If I look back more than 20 years instead, to when I was in college, I can see that college has gotten cheaper. Tuition is a tiny bit lower, but the big change is that tuition and books for the first couple years are now free if you get it done in high school. That cuts the price in half.
This is not to say that I pay less. I now have a huge family. Things are cheaper, but I'm buying much more.
Please provide a source to back up this claim, everything I've seen says inflation is /under/-stated, not over. CPI absolutely takes into account substitute products and CPI is not simply tracking a basket of items over time.
These substitutions are tricky, if hypothetically a consumer can move from eating fresh local produce to preserved canned produce then it's likely they will make the switch under price pressure when fresh produce increases in cost by 2x. You could calculate CPI based on the new realized purchasing patterns - or you could calculate it based on the desired purchasing pattern.
Basing CPI on realized purchasing behavior will lead to errors in how inflation is perceived or where consumers are trading quality for cost. From a monetary policy perspective ignoring this consumer tradeoff could lead to sudden shifts in CPI when consumers run out of quality substitutions.
I'd argue we've seen this in housing in the major cities where first home prices were excluded for rental equivalent, then rental quality fell in both the amount of space available in a unit as well as the overall quality of the unit. Eventually you hit the wall where quality can't be traded off any longer and you're left with many people who can't legally house themselves.
Then one day cards are 'good enough' that someone builds an application that leverages this power, and all of a sudden that becomes the new baseline. Over night you went from having a video card that is three times what you need to a third of what you need.
We might consider availability of seafood to be a given now, due to improvements in food logistics. But it wasn't always the case. For sure strawberries in winter were just not a thing one would buy until relatively recently.
If I wanted vitamin C in February before it would probably be in the form of jam or tomato sauce.
I’ve seen this a lot around the net and I’m honestly and genuinely curious. What drives you to defend the CPI?
What drives you to question the motives of the commenter rather than responding to his arguments directly?
personal beef? no. I thought this is a forum for civil discussion and reasoning?
Whose calculations? The Federal Reserve's calculations? The Federal Reserve has access to a variety of data sources, and while the CPI is the one that gets the press, they also use series like the chained CPI, the producer price index, bond yield curves, unemployment (and not just U3, but things like U6 and the labor force participation rate).
If all you hear about is vanilla CPI, well, that's because you're looking at a newspaper.
Anyway, as I said. You have a beef with the Federal Reserve.
> why are retail accounts in germany, netherland already negative rates?
Public policy, as effected by the European Central Bank. Perhaps you have a beef with them too.
> does that make sense to you?
I mean, it makes sense as in "I understand why they do it", not as in "I think this is a great thing".
> can banks make money that way?
I've read that low interest rates do, in fact, squeeze their profits, though with regards to Germany the "three-pillar" system is crufty and weird and squeezes profits too. For instance, here is this lovely article I saw a while back, whose subhead notes "Low interest rates and the three-pillar system squish profits": https://www.economist.com/finance-and-economics/2019/03/02/c...
> danger of nationalization of banking?
I'm not sure what you're talking about any more. It seems very detached from the Bureau of Labor Statistics, or European equivalent.
I'm starting to understand what you're insinuating I think, but you still haven't made your point.
Hedonic adjustments have very minor effects on tech products (which is one of the few areas I've seen a detailed impact analysis, though not recently enough that I have it at hand.)
> Technology is deflationary, things should get cheaper because we go after producing them in creative ways one demand is high.
And...they do. Hedonic adjustments have an effect on how that is reflected in inflation statistics, but they don't effect the underlying processes.
> CPI is absurd, it only perpetuates consumerism and punishes savers
I think your are (among other errors with that description) confusing measuring inflation with policies targeting a small positive level of inflation. CPI doesn't do either of those things.
Any measure of inflation is subjective. That doesn't make it B.S.
Inflation is a measure on a basket of goods. There is no single basket because people buy different things. This is why there is no single CPI statistic.
Find a CPI that works for you. The federally-provided ones go as fine-grained as income bracket and metropolitan area. They're extremely precise, but may not be accurate if you have unusual purchasing habits.
Almost financial market professional, including those at the Fed, is tracking multiple measures of inflation.
If they're not giving you a one-page report on the methodology for how they arrived at each individual point-in-time price figure that they recorded, well, I'm sorry, it's true, their methods are in that sense "hidden".
Publishing the particular products looked at, or even the particular stores visited, would invite market manipulation of the CPI figure by re-pricing the included goods.
https://www.clevelandfed.org/newsroom-and-events/publication...
TIPS use CPI like a lot of other things in bond math: https://www.treasurydirect.gov/indiv/products/prod_tips_glan...
And as a consequence the wages you earned by making tech year ago should have less value than the wage you earned today. You should expect small inflation. If you want deflationary money, wages should decline year by year.
If you want to save, don't hold cash.
hold what then? become investment manager in free time instead of my day job as software developer?
If you are in the US and just want to keep the value, Treasury Inflation-Protected Securities (TIPS) directly from the U.S. Treasury. https://www.treasurydirect.gov/indiv/research/indepth/tips/r...
Just buy a mutual fund (preferably indexed) from somewhere like Vanguard and let them figure it out.
More or less the author argues that stable nominal spending, ie a constant level of nominal GDP, is pretty much ideal. And would lead to falling prices as you suggest.
If you replace constant level with 'target a level of nominal GDP that rises 4% every year' you have pretty mainstream position.
Inflation measures are indeed somewhat subject. Nominal GDP has less suggement calls.
(It's still useful to try and measure inflation. But perhaps it should not be a policy target.)
George Selgin is a dyed-in-the-wool fan of fractional reserve banking. (And with good reason.)
You can buy a brand new 4 Bedroom house in a nice part of Tokyo for ~$300,000, but don't expect to make money on the deal.
Shelter is much closer to "food" than to "a piece of paper representing a stake in part of a corporation".
At some point if the prices rise enough it should become profitable to streamline the supply chain?
Seems like a lost opportunity to create so much anxiety with a long piece like this, to then only have this single line to hint at a reason for the rise.
Can anybody more economically minded clarify if this is just post-covid rebound supply chain prices or is this food prices adjusting closer to their 'real' cost?
Also what events do they refer to regarding 'poor weather'?
1. Biblical scale locust infestation in much of Africa, and Asia
2. Floods in East Asia
3. Early winter in Russia, Ukraine, and North China
4. Failed, and missed sowing of grains in much of above regions
5. Shipping disruptions, and resulting food spoilage, and waste
6. Granaries busted, and people burning through many months worth of grain, and flour in much of third world due to initial COVID panic
7. Financial speculators having the best field run on agriculture in decades
8. Anxiety about point 6 repeating runs on food wholesalers again
https://www.aljazeera.com/news/2020/12/10/nobel-winner-wfp-w...
It's not just food. Lumber, Steel and Oil aswell. https://www.ft.com/content/6a7c232e-9c63-420c-ac05-40aea84a9...
EDIT: noticed link is paywalled (but not when you access via google) alternative article here: https://www.reuters.com/article/us-global-markets-idUSKBN2AM... "World shares slide on inflation fears, commodities surge"
Personally, I'm surprise at how robust are the global supply chains that have been able to keep things more or less normal despise what we have been through the last year.
The quantity of reserves created by the Central Banks are irrelevant if they are not spend in the economy. There are two effects to this "printing money": one is that the interest rate goes down facilitating borrowing from the private sector. The second is that governments have the ammunition to spend in stimulus. If the two things happen we could see inflation, but, notice that this the desired effect: compensate for a fall in the normal demand in the economy.
>" [..] central banks over the world have printed an astronomical amount of money. Even though they may state there is no significant inflation, I dont buy it [..]"
It seems to me that, in your model of the world, this should be leading to hyperinflation. If this is the case, my model of the world is wrong and I will make an effort to change it. I wish all the people has been predicting hyperinflation the last 30 years did the same if it doesn't happen. Somehow, I doubt it.
By now, the quantity theory of money based in the fractional reserve banking model should be discredited.
When the rest of the world begins using other systems than the reserve currency to conduct trade, the end result is that the inflation returns home as demand for your currency drops.
We have lots of things to worry about -- inflation isn't one of them.
I really hate this comment. I am worried about not being able to ever being afford a house for my family. Avg income in my neighborhood is ~49k but a 2 bed condo here are selling for 450K and getting outbid by 75k over the asking price. Its insane.
Maybe you already own a house and are happy that prices are up. But its really weird to tell other ppl what they should be worried about.
Prices are up for multiple reasons, including more pressure on shipping channels due to increased demand for goods across the board.
Also, this article is largely about inflation in developing nations like Indonesia. The inflation noted in countries like the United States is more pedestrian:
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
The market is up 2% YTD, but down 4% from peak. It’s a reasonable time to buy (better than peak, at least).
If you must try to time the market, use time cost averaging to reduce volatility from getting a peak (or trough) price when you enter the market, but know that doing so reduces expected returns. The basic idea is to put 1/n of your money in over the next n weeks.
There are other things like real estate and government contacts, but those are less available to the casual investor, except through stock market funds.
https://www.cnbc.com/2021/03/08/how-the-young-plan-to-spend-...
John Hussman has a nice article on the option value of cash. https://www.hussmanfunds.com/comment/mc201201/
tldr: Suppose I offer you a security that will pay $100 two days from today. You can buy as much of it as you like today at $50, or you can wait until tomorrow. Tomorrow, I’ll flip a coin. If it’s heads, I’ll sell you the security at $99. If it’s tails, I’ll sell you the security at $25. What should you do?
Clearly, if you buy the security today, you’ll double your money two days from now. That’s a 100% expected return for each dollar you invest, over that 2-day period. If you wait, you’ll earn nothing on the first day, but you’ll then have two possibilities. If heads, you’ll get just 1% on your invested money. If tails, you’ll get a 300% return, quadrupling your money. With a 50/50 chance at each, your expected return for every dollar you invest is 0.51% + 0.5300% = 150.5%. So waiting adds 50.5% to your expected return over that 2-day period.
Borders are shut so no backpackers come in, so a lot of fruit died on the field.
https://www.nytimes.com/2021/03/02/world/australia/agricultu...
It should be noted that the entire industry is notorious for doing every dodgy thing they can get away with, wage theft, rent theft, extreme conditions, so local workers stay as far away from these jobs as they can.
Other industries have done OK though. Wheat grain, for example, is predicted to be pretty average: https://research.csiro.au/graincast/wheat-yield-forecasts/
In Europe, there are seasonal harvests that require surges of workers, who are sometimes legal and sometimes not. For example loads of foreign workers flock to the vineyards in France, Italy or Spain to collect the grapes for winemaking. It's around 3 weeks of work, obviously not worth a permanent contract.
There were very few restrictions in those countries by the time of harvest (September) so wine prices, to my knowledge, have remained largely unaffected, but if it happened otherwise, winemakers would have been, without doubt, lobbying against the restrictions.
Pay the 400 bucks and you're good for a year.
You can work legally as long as it's no more than 6 months anywhere, and it's pretty easy to get around that.
You can extend your visa for another year if you do 88 days (~3 months) of "farm work" -- doesn't have to be on a farm per se, I know a guy who worked in a hyper-remote rural gas station ("road house").
I worked on a very remote cattle farm digging watering trenches and welding cattle pens. Then hitchhiked across the country.
[1] https://en.wikipedia.org/wiki/Backpacking_(travel) [2] https://immi.homeaffairs.gov.au/visas/getting-a-visa/visa-li...
Many containers are abandoned in countries that aren't on major routes because they took PPE to those countries, but never bothered to bring the empty containers back.
Also lots of boats moored off the US East and West coasts, plus Europe, waiting of loading/unloading because of delayed supply chains due to COVID.
It's a butterfly or ripple effect of high optimized supply chains being affected by small changes caused by nature/the government throwing a virus shaped spanner in the works.
I wonder how many warehoused things that require power and integrity got damaged.
https://www.reuters.com/article/us-usa-fed-dudley-ipad-idUST...
If you go to bls's site, you can easily tell what it's being canceled out by. From the looks of it, it's mostly being canceled out by low energy prices.
I guess my TV is a good emergency snack for when I can't afford food.
Only if it's an Apple ;).
I'm sorry, I'll show myself out.
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
The soaring food inflation refers to developing countries like Indonesia, which are facing a different set of problems.
This is not demand-pull inflation. People are not eating more than they were a few months ago.
This is supply constraints making their way up the chain, constraints in the supply of shipping and in the supply of produce.
You would not have liked the 80s.
But 2% per year faster than inflation is already quite bad. Remember, this is exponential.
Another crash coming in the next couple of years?
The article mentions that US food prices are inflating at a much more pedestrian 3%:
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
I highly recommend taking 30 minutes to watch it, the person speaking is a well regarded economist.
You mean Ray Dalio? Wikipedia says he's a hedge fund manager and has a MBA, but no economics degree.
Sure all feels like inflation to me.
We printed our way out of a pandemic recession, so who knows what other nuclear options will be used to avoid near-term recessions.
Capitalist economies have a short boom bust cycle and a long one. Short ones cause recessions every 10-20 years. Long ones cause depressions every 100~ years.
It was clearly stated that Covid (if nothing else) could easily cause a recession, with other factors played in as well then it could easily trigger a depression.
https://www.thoughtco.com/difference-between-a-recession-and...
If anything, they got better since the introduction of Keynesianism, not worse.
It's inherent to capitalism. Don't try to delude yourself.
There's a reason that interest and usury are prohibited in Islam, Judaism, and Christianity.
Market competition is good. Interest and usury are destructive dangerous practices.
As far as homes, there HAS been real estate inflation, but homes are now better insulated, have much more efficient heating and cooling (and now have actual cooling whereas in the past were often uncooled), have more bathrooms, and have much more efficient and cheaper lighting (which doesn’t need to be replaced as often and has lower fire risk).
Clothing is so plentiful and cheap it’s a bit silly (and this used to be a major practical purchase and highly labor intensive to mend your clothes, so I’m not talking just fashion).
A lot of things people actually need really are much better than in the past.
I hope we fix the housing price issues, though. This is really bad.
None of that really makes a dent price-wise in the more expensive real estate markets.
That all matters less than the location of the house.
...Food price rises ARE inflation!
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
The study found that food prices are rising faster than inflation.
3% is high, and 1.5% over inflation is also concerning, but I think a lot of people are jumping to conclusions based on the headline. Those inflation numbers would go unnoticed by most during normal times. We’re only seeing these headlines because inflation is a popular media topic right now.
Low inflation is essential to justifying the monetary easing policies that have been sustaining the stock market through the pandemic... so it is important for everyone to keep an eye on how dialog changes around these numbers.
[1] https://www.aei.org/carpe-diem/chart-of-the-day-or-century-3...
I saw another analysis suggesting a 75% drop in media coverage of Biden vs. Trump, at this same point in each’s presidency. That’s a useful statistic that I have a hard time finding in a comprehensive way.
It's much clearer to say "the rest of the basket hasn't risen above normal yet, but I am concerned the headline I quoted will mislead people who don't understand inflation.
There, fixed the headline.
https://fred.stlouisfed.org/series/CUUR0000SEHA
I believe those are the two housing sub components of the basket, with owners’ equivalent rent weighted more than the rent one. Eyeballing it they both look under 2%.
Causally, inflation in the US is driven by the Fed's 2% average inflation target.
How those 2% distribute amongst the basket of good is a different question, of course.
Does anyone have the data sets and the formulas used to calculate the CPI? No, I don't think so, because they are hidden.
Until the data used to calculate the CPI is open, it is all speculation.
Be sure to refer to overview.txt and for more high-level details refer to https://www.bls.gov/cpi/data.htm and https://www.bls.gov/cpi/methods-overview.htm — you might also find relevant information on weighting here https://www.bls.gov/cpi/tables/relative-importance/home.htm
Typical entries in the AP (Average Price) series look like: APU0000701322 2015 M05 1.335
where APU0000701322 is a pound of spaghetti or macaroni, and M05 is May.
I thought of telling you off for spreading misinformation to incite, but I figured that saying it this would gets my point across more strongly.
I agree they're not the entirety of the basket, but they are a core component.
There is no "general price level".
In plain English this is the fractional reserve banking system providing a cornucopia for all. It's really using debt to finance not capital creation, but current consumption. This cannot possibly end well.
Seems like we may need a new technical term to replace "fractional reserve banking", because the Fed reduced reserve requirement ratios to zero percent a year ago.
https://www.federalreserve.gov/monetarypolicy/reservereq.htm
I don't understand the distinction here. Capital creation results from meeting the needs of current consumption, no?
For examples of climate havoc, look at the drought in Taiwan and the deep cold in Texas.
For examples of resource contention, look at oil and even at nickel. Those batteries meant to replace oil in turn require cobalt or nickel (at least for certain applications).
The climate havoc and resource contention have much greater than linear effects. I don’t think most people realize this. Food shortages lead not only to higher prices but to civil unrest.
https://www.ishares.com/us/products/239757/ishares-sp-gsci-c...
In other words a commodity ETF.
Is this panic buying? Is it OK? Does it hurt other people? I’d be interested to hear some different points of view.
But don't panic buy. Don't now go to the store and stock up massively. Put in an extra shelf-stable item, and next time you go shopping do it again, but don't panic now. That's how you create a food shortage.
Even if you add "only" 10% extra to your purchase, I think that's what happened with toilet paper. I purposefully didn't buy any, figuring the crazies would get their fill soon enough, but a month later it was still going and we were trying not to be in the store more than once a week to prevent that being a spreading place but could now only buy 2 rolls at a time per family and many stores were completely out. Of course, we didn't even have to ask neighbours yet (some neighbors will have had to spare, not as if the rolls all disappeared into thin air) so it wasn't bad in any way in the end, but this panic behaviour is unnecessary and very quickly detrimental, even when a majority of people understand it's unwarranted.
No, they were going down the drain.
I call this FCA, aka "Food Cost Averaging".
In a crisis bad enough that your prudence and foresight significantly affects other people by depriving them of food you can give them some of your food.
But in that situation you're probably done for already, and should have gone up in the hills, eh?
John Titor said something that scared the shit out of me. Paraphrasing, it was something like, "If you want to survive, move to a place three days further out than a starving person can walk."
( https://en.wikipedia.org/wiki/John_Titor "John Titor is a name used on several bulletin boards during 2000 and 2001 by a poster claiming to be an American military time traveler from 2036." )
If you're worried about the collapse of civilization then, no, stocking up is not going to help as much as just getting way the hell out there in the woods and being self-sufficient. You'll be rolled by starving people. ("People always raid before they starve." https://spaswell.wordpress.com/2016/11/18/dr-gwynne-dyer-geo... )
For disasters less severe than that, then YES! Stocking up is the responsible thing to do and we should all do it as a matter of course, virus or no virus.
Even assuming that there's some kind of enormous EMP that kills all modern cars, there are plenty of pre-80s cars around and around a third of Americans have bikes. You can cover some serious distance on a bike if you're motivated enough (aka by hunger.) There are millions of horses in the USA, not to mention other animals and tools you can use for transportation (canoes etc.) If your bet is to hope that your fellow members of the most adaptable species on Earth won't get to you, you're generally screwed. If you plan to use force (say firearms) to hold back your place, well, that'll attract attention from anyone else (if you look at failed states, you're likely to see roving bands of criminals with more firepower than you.)
There are fairly few examples of people who made their apocalypse preparations and actually rode out the local serious disaster in their bunkers, so to me, it's obvious what your best bet is - to simply live in a safe, sane and successful society.
You should always have some amount of food reserves. Space allowing, at least a few days of food. Canned and dry goods with long shelf lives - eat the oldest of this first during regular usage and refresh the stock so you don't end up with 5 year old canned goods.
> Is this panic buying?
A little, yes. There's not much risk of long-term food insecurity in the first world (at least not in the US). There are occasionally disasters that affect us short term - think hurricanes, floods, electricity outages, earthquakes, winter storms in Texas. I'd advise being able to get through those.
> Is it OK? Does it hurt other people?
It can hurt others. At the beginning of the pandemic there was a lot of panic buying. Part of that was an overreaction, part profiteerism, part of it was the world being unready to pivot to consumer goods (like with toilet paper). Do it gradually. Don't go out and buy out a canned goods section at your local supermarket.
On the other hand, having a stock on hand already can be helpful. It means you won't need to join the panic buying, because you're already stocked, and you stocked at a time when the system could easily handle it.
It is a good thing for everyone to have some supplies on hand. It makes all of society more resilient against all sorts of disasters. It means that if your area finds itself in need of emergency services, those emergency services may not have to go to you, leaving them for someone else who may be in more trouble (e.g., someone who was at the epicenter of whatever and legitimately had their supplies totally destroyed).
It is the socially responsible thing to do to have some vital supplies on hand and be able to survive independently for a few days on as few services as possible in your area.
The article mentions that inflation in the United States is much more pedestrian:
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
Buying and storing food is an inherently inefficient process relative to buying the same food as needed. You would end up spending more to build and maintain food reserves than you would save against inflation. Far more.
The article doesn’t suggest that we’re at risk of running out of food.
It is like energy and power demand on the electical grid. You lower the peak power demand.
The tragedy is that much of the food being stocked up in people's homes will go to waste as they don't have the facilities or knowledge to store it properly. Food suppliers have way better storage facilities than you do at home. They know how to keep food available all year round. There's also plenty of food to go around as should be blindingly obvious by observing the waistlines of people around you and that's including the fact that the food supply chain already has a ton of waste built in.
Tragedy of the commons.
How can farmers meet the payments on their loans?
Reading 'The great depression: A diary' and looking at the world today just shocks the hell out of me. We are following it step for step and the crash is going to be devastating.
Really? Top voted comment on Hacker News? Yikes. Things have really gone downhill around here. Stick to tech, folks.
"During the early 1920s, for example, prices dropped a total of 20%. And during the worst years of the Great Depression, from 1930 to 1933, prices fell a total of 25%"
I mean, the title of the article was even : "Food Prices Soar Globally"
If you want to be a doomer, than at least compare it to the stagflation of the 70s, but honestly, that's probably not accurate either.
Edit: In Sweden we have/have had similar situations with temporary immigrants that for example pick berries for exploitative wages, but that’s because there’s no actual minimum wage per se - in the rest of society decent wages are ensured by strong unions (except in areas where demand is high anyway, like say for software developers).
I'll pay you minimum wage, but charge you exorbitant amounts for board and lodging and you have no choice because it's the middle of nowhere.
Or for the extra dodgy types, cash payments below minimum wage because they know international workers are less likely to know their rights and be aware of what the minimum wage is.
(Australia's geographical isolation makes it difficult to attract seasonal workers, unlike throughout Europe where traveling for work is comparatively cheaper and easier.)
However, farmers have always benefited from the fact that people wanted the visa more than the didn't want to work — many workers are taken advantage of. Now that there are none of these workers, farmers are having to complete for labor like anyone else and that is costing more than they intended.
For example, people from Central America trek up at risk of their lives through dangerous drug lord territories to get to US states where they can work illegally for less than minimum wage, then send that money back to their families because they can make much more doing that than they could at home and may have no other choice.
The working and living conditions can be terrible, and answer is not to deport them or make their conditions worse; that hurts the host country as well as the workers and creates more division. Similar workers boosted the US culturally and economically because industry and governments embraced them for labor and taxes.
No locals will do the work because... Why would you. Living in a caravan for the whole summer and working 12 hours a day isn't a good deal. Maybe its worth it if you intend to move back to a county where you get much better purchasing power?
EDIT: It's energy. https://www.bls.gov/cpi/
But the article is really about 40% spike in global basic commodities for the global poor, not 3% US bump.
All of this - and things like toilet paper - shifts to consumer goods instead of bulk goods, which takes different equipment and processing in factories, often at different times. A portion of school lunches in the US are the result of government subsidy foods: Cheeses, potatoes, and so on are very low cost to public schools.
In short: Consumer foodstuff demand has increased.
Additionally, more folks are spending a bit of time with food, changing the demands. Plus, home and slightly depressed/anxious with newly found free time means you have more time to eat - and many have taken up eating more.
And then you do have crops that couldn't be picked, disruption in shipping (food travels far), and disruptions in factories that complicates things.
Actually, what we had was a sudden reduction in the amount of flour being used by bakeries, and an increase in the amount of flour being used at home. There wasn't a shortage of flour - there was a shortage of small bags to put it in for selling at a supermarket. The industry was all set up for selling a decent proportion of flour in really large bags.
Likewise, for simple goods like vegetables, dairy, and beer, some suppliers have suddenly had their customers disappear, because they normally sold to restaurants, pubs, and caterers, where other suppliers have not been able to keep up with demand, because they sold to supermarkets. The obvious solution is for the suppliers who previously sold to caterers to sell to supermarkets instead, but it takes a while for these contracts and logistics to be sorted out.
Zero problems in any of the major supermarkets in my area in the South East. My food bills haven't increased notably either, if anything, looking at my bank statement right now, they seem lower over the past 4-5 months than the year before.
The only anecdotal thing I have noticed, is that there a few new brands on the shelves that weren't there previously, but that's probably just observational and confirmation bias, because I was looking for something, I saw it.
Just the usual scaremongering.
I also shop at Tesco and the stocks haven't changed at all.
Aldi, Lidl, M&S, Morrisons and the local greengrocer all seem the same as usual here.
Are you in a really shitty area or something? I only saw what you described in the first week of lockdown one. Nothing has noticeably changed in my local Morrisons for the last few months.
depression spurs eating binges.
being inside what to do, oh lets make more advanced food. lets bake cakes with the kids instead of sending them out to play with friends. etc. etc.
so increased consumption in combination with other, probably more important, pandemic problems.
There are a lot of people comfort eating and generally grazing out of boredom. I'm sure I've been eating a little more than I should with the crappy foods. Plus, people are saving so they are probably buying more foods to stock up on and thus throwing it all away.
Continuing to inflat the money supply is the politically expedient option. Price inflation is a related phenomenon. The Fed is unable to decrease it's balance sheet in a meaningful way.
Some politicians are critical of central bank monetary policy. They are frequently maligned.
The same was true for Covid at the beginning, no one could quantify how bad it actually would be with wild figures in the 5%+ mortality rate. So we screamed for shutdown.
Problem though is that now it's very much clear that Covid was nowhere near that level of mortality, still bad but not the doomsday scenario. Now we we'll have to see what the cost of maintaining the reaction to the initial Covid doomsday estimation; with lockdowns and short term shoring of the economy through fiat currency production.
The inflation in countries like the United States is much lower (around 3% on food compared to 1.5% overall inflation).
Ironically, some of that inflation is due to increased demand for goods providing more demand for shipping services due to lockdown. People had a lot more money to save or spend during lockdown (personal savings rates spiked upward), so shipping prices are inflating due to demand. Food is often shipped, so these inflation costs are partially from shipping costs.
Most people in the western world aren't likely to buy more food, just because they have more money.
Not saying, we won't see inflation, who knows, but I doubt we'll see it in household items.
No, the problem is that there isn't enough food in the first place. The rising price rewards farmers who produce additional food. You just need to run a stimulus program for farmers so that they can expand and mechanize their farms to increase yields.
I wish people would look at physical reality first and then look where physical reality takes the market rather than looking at the market and ignoring what physical reality looks like.
That's the issue here: not only is stuff you need getting more expensive because of the expanding money supply but the new money is being used directly to cause it rather than helping the individuals that need help.
If you have more money and you use it to buy more food, that's not inflation.
Inflation is when you have more money and you use it to buy the same amount of food. Give people more money, and you will see the price of everything rise without seeing the amount of stuff they buy go up.
They mention US inflation down below:
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
Money printing isn’t the only or even the main driver of inflation. Increased demands for goods during lockdown has put upward pressure on shipping costs, which is reflected in food prices.
All around us, obscene amounts of food is going to the bin.
--
On a related topic, quite a few commenters here have made uninformed or intentionally misleading comments about the relationship between inflation indexes and food/energy prices. Let me quote this explanation posted 10 years ago by a PhD student of economics at MIT:
"Food and energy are not excluded from the Consumer Price Index. The standard CPI, which is used to make cost of living adjustments to Social Security (among other things), reflects a full consumption basket, including food and energy.
The index that excludes food and energy is the core CPI, which is used for a very different purpose -- namely, the U.S. Federal Reserve's decisions about U.S. Monetary Policy.
A few observers seem to believe that excluding food and energy from the core CPI reflects either deep ignorance or conspiratorial neglect on the part of monetary authorities. Nothing could be further from the truth. In fact, core CPI (along with some alternatives like mean-trimmed price indices) is a very sensible reaction to the dilemmas facing monetary policymakers.
Suppose that the Federal Reserve had a mandate to stabilize the full Consumer Price Index, and that food prices suddenly doubled. To keep the CPI at a stable level, other prices would need to decrease. The problem, however, is that many prices are sticky, meaning that they do not instantaneously respond to changes in monetary and macroeconomic conditions. This is especially true in the service industry (which comprises the bulk of both Gross Domestic Product and the CPI).
To create these compensating price changes within a relatively short timespan, the Fed would have to impose extremely tight monetary policy, with sky-high nominal interest rates. And as we saw in the early 1980s, a large increase in nominal interest rates is extremely destructive to the real economy, leading to a massive increase in unemployment. Given our already weak economic conditions, such a policy would be even more damaging today.
Core CPI is a way to prevent this kind of needless suffering and unemployment. By targeting a stabler set of prices, the Fed avoids the wild swings in monetary policy that would inevitably arise from targeting an index that includes commodity prices. In other words, the demagogues who assail core CPI have it all wrong: the average American would be much, much worse off if the Fed targeted a volatile measure like headline CPI."
Source: https://www.quora.com/Why-are-food-and-energy-costs-excluded...
And then it made sense to me. When the cost of everyday goods go up, there is more money flowing in meager industries.
That means more money for the average joe. (Or it used to be before robot corporations overtook farming.)
And that means more concentration of resources for the normal guy. Which means smaller housing compared to McMansions. And smaller cost of living all around. The problem is that today’s large rich population become not so well off. And poor people hit a better standard of living.
Higher food prices may be a good thing.
Inflation may come right after. This is not good.
A. More left for the rest
B. No need to produce the amount produced right now
C. Reduced impact on the environment
But yeah, let's think about that ,once we do actually have a crisis, as a last resort. Keep stuffing your bins with food you didn't eat and wondering why prices soar.
Ends up being Food and semi conductors.
Therefore food prices shift right?
Consumption is probably the same for most families, albeit they may buy 10% more to make sure certain staples are good in case of a shortage.. more so during the ebb/flow of covid-19 waves and lockdowns.
So a family might end up wasting more food just to be sure they have enough for planned meals or alternatives.
A lot of people are having mental health issues from lockdown, that can affect eating behaviors as well - depression can cause gain or loss of appetite so that's up in the air - could also make you plan to eat in but then decide to get take out because you're too depressed to cook. (Source: I've done this as my anxiety/depression has been really bad this year and my wife who's never been depressed is barely functional this year).
I think the biggest thing is just everything's shifting. We're not just dealing with covid-19 but also fires and other natural disasters. Unfortunately, I think climate change could keep this the norm even if covid-19 is completely normalized (i.e. we return to some semblance of normal).
Covid-19 variants could also keep things an issue. I'm going to get flagged for fear-mongering but I don't see how the next decade gets any better than it is right now, except for fleeting relief cycles as we come out of the pandemic ... but there's a lot of shifting global strife.
You can almost feel the change from day to day everything's changing faster and faster and it's getting harder to predict the future. Kind of like the singularity when technology speeds up.
This is not about the USA. This is about the vast majority of the mankind that lives on developing countries, vast armies of people already under the threat of food insecurity in the best of times, now unemployed and facing the threat of food inflation.
This is the stuff that create coup d'etats, dictatorships, rampant crime and wars.
Meanwhile you're working on automating work to make this people even more unemployable, and have the nerve to complain about a small food price increase in the frigging US of A.
Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.
But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
This was the Captain Samuel Vimes 'Boots' theory of socioeconomic unfairness.”
< https://www.goodreads.com/quotes/72745-the-reason-that-the-r... >
So in short: no. Everyone is wasting.
""" The Onion Futures Act is a United States law banning the trading of futures contracts on onions as well as "motion picture box office receipts".[1]
In 1955, two onion traders, Sam Siegel and Vincent Kosuga, cornered the onion futures market on the Chicago Mercantile Exchange. The resulting regulatory actions led to the passing of the act on August 28, 1958. As of January 2021, it remains in effect.[1]
The law was amended in 2010 to add motion picture box office futures to the list of banned futures contracts, in response to lobbying efforts by the Motion Picture Association of America.[2] """
When normal ingredients we used became unavailable, it caused us to continually try new things. I have to admit I was pretty surprised to see today's customers buy up the basic scratch ingredients like rabid consumers early in the pandemic. Flour, sugar, etc. were all a real pain to get a hold of.
I thought prices were increasing pretty steadily before the pandemic and now it's even worse. I can remember so many items being as cheap as 25 cents each during the 90s and into the 00s... now most of them at $1.50 each. Meanwhile, our state minimum wage has increased not nearly as much (but employers are having to offer closer and closer to double to rope in anyone).
How long have you been having a pandemic for?
Joking aside (that sentence read a bit weirdly), I don't think you should compare what happened in the 90s with what happened since 2020-02. If inflation surpasses minimum wage in the long term, that's not the same as prices soaring because of supply chain changes. And for what it's worth, I've not noticed any price increases here between 2020-02 and last week. This is way too anecdotal and conflating different situations to be useful.
I see that as a win. Neither flour nor sugar is essential or healthy.
Gotta love some of the people on HN. Maybe it's just the late night crowd?
In my little bubble, in the Bay Area, it feels like plain old greed, and opportunity, but not price gouging.
When the government tells me where I can shop, along with my fear of how certain stores have dealt with Covid precautions, my buying habits don’t take price into account like before.
The first few months; I bought transportation, and raw costs, but now I’m not so sure.
My local Safeway has raised prices on everything. At first, they looked like they were trying to be fair. Now——it looks like they know people can basically shop fir food, so why not raise prices on everything while they have you there?
Same goes for Homedepot. Yea, raw wood prices, and appliances have gone up, but it looks like everything they sell went up.
I haven’t been into Whole food because my local store has had too many sick employees.
(While we are on prices, Mercury Insurance refunded me $6.46 on a $600 policy, and that was last year. Why hasn’t my insurance gone way down? It just seems like accidents would be down? My policy is minimum I can legally get away with. I was going to switch to an insurance company that bills per mile, but my old car does not have a computer that Tye “honesty” devise can plug into. I would be happy to send the company a picture of my odometer monthly, but that is not an option.)
Which government is telling you where you can shop? In what way do they do that?
Pre-pandemic, I suspect I purchased over half of my caloric intake from a food vendor other than a grocer. 15 years ago, that would have been 90+% (as so I expect the younger cohorts today would be similar)