Here's wholesale food prices in the US: https://fred.stlouisfed.org/series/WPU578101
In fact you'd expect reduced sales from the higher prices to put pressure on profits. That is what seems to be happening in the UK:
https://www.grocerygazette.co.uk/2023/01/31/food-companies-p...
But not in the US, where it does look like there may be some gouging going on, but we'd need to see their profit reporting to be sure:
https://accountable.us/wp-content/uploads/2023/02/2023-02-10...
Should we be concerned about why there are shifts in demand/supply? Sure.(In the case of food, part of this is driven by the UA war and likely other trends in food productive)?
But it is eminently unhelpful to simply attribute increases to 'gouging' and expect that to be the final say.
and i don’t think you’d expect it to. the increased supply needs to hit the market first. depending on how that money is distributed, that could take a long time. also remember that QE has been central fiscal policy in the UK and US since basically 2007. and it’s safe to say that concentration of this wealth is.. very high.
> has UK M2 declining [..]
it becomes a bit more sobering when you look at the full scale on that graph (when the y-axis starts from 0). it’s a metaphorical deck-chair-thrown-off-of-the-titanic amount of decrease.
Yes we have high inflation now, but that’s just been a plain old cockup. The massive inflation reduction act stimulus for example.
The profits are inarguable. They really have never been higher. https://tradingeconomics.com/united-kingdom/corporate-profit...
(note the table underneath pointing out that industrial production has declined at the same time as record profits)
Energy is a large part of that: https://www.bbc.co.uk/news/uk-64489147
This feels correct, but if that were the case, if companies are generating record profits, why aren't we seeing that reflected in stock prices? At the very least, why isn't price / earning ratios cratering?
What are profits like adjusted for inflation?
they only need to increase prices to deal with the increase in costs, and profits represent an increase above and beyond that necessary amount, which in economic terms is "not cool, dude"
The root cause is economic decoupling between Russia, China, and the U.S.
Couscous and margarine and eggs being more expensive across the board at the supplier level. This does not speak to any sort of cartel behavior.
Companies are smart. When news gets spread far and wide about a shortage of eggs or other products due to disease or wars or "supply chain issues", they leap to take advantage of this consumer consciousness by increasing their prices, knowing the consumer will blame the larger macro factor and not the company. This has been well-documented, even in cases where the supply chain issues didn't actually impact the company that raised prices.
The best way to understand what's happening is via corporate earnings calls. They're upfront with their strategy when talking to investors.
For more info I'd recommend listening to this episode: https://www.bloomberg.com/news/articles/2023-03-09/corporate...
I don't deny that corporations will try to make a buck taking advantage of favorable price-over-volume plays when they can, but I think it's crazy that people think during a global energy and fertilizer shortage Walmart just decided to throw out all of their low-price volume corporate strategy just to screw customers over egg prices.
I'd expect decent firms to not try to gouge customers who are already hurting at the time when they most are, but maybe "normal" means "sociopathic" in the context of amoral unrestricted capitalism
There are quite a few significant supply bottlenecks in the U.K. food supply chain, from supermarkets to wholesalers to importers, and they do allow for price fixing - demonstrably so in the case of supermarkets and domestic produce.
Also with a "big evil" you can tell yourself that removing that evil would solve everything.
I use housing as a good example since it's been a major driver of inflation and most houses are sold peer to peer on the open market. If you're selling your house and you see comparable houses selling for $900K, but you only need $750K to earn enough profit to buy your next house, what are you going to do? Sell for the lowest price you can afford? Or sell for the highest price you can get? You'd sell for the highest price. And that same calculation gets played out at every level of every transaction in every corner of the global marketplace. Yet nobody would think of themselves as being a villain for doing it. Or be accused of gouging.
The house sale is a perfect example, and is something to meditate on. (One solution is 'competition' such as making sure new houses are being built, other companies can produce food, etc.)
When a store runs out of flour, people don't get as mad at the store as if they raised the prices but keeps flour on the shelf. Despite the fact that having an expensive option for flour always leaves you better off than having no option.
After Hurricane Katrina there were some prominent examples of people being arrested under anti-scalping laws for trying to haul in food and generators from other areas to sell.
There are currently competing narratives in the UK about food prices - greedy supermarkets v poor farmers and the same people complaining then say they shop at Aldi because it's cheaper.
Food is still cheap - it represents a small percentage of people's income. However, in the UK, we are beginning to see that food produced without the benefit of slave labour is somewhat less cheaper than it used to be.
If you look at it as an average for the population, sure. But that masks the real issue, which is that it hits poor people the hardest because spending on food doesn't scale proportionally with income.
The main change has been energy prices (it is complex because supermarkets stopped selling some products, so the price recorded is not what consumers experienced because the product largely wasn't available).
Also, just generally, that isn't how demand for food works either. It isn't elastic, there are substitutes for every product. The main factor driving differences between countries is usually the structure of the food supply chain and exposure to trade.
I doubt it. I've read that Americans throw away 40% of their food. Obesity rates suggest people eat far more than they need to. And there are major choices in what to eat - cheap vs expensive calories.
Friends in the US drove school buses during the day and worked at Wendy's at night, only to give back a substantial part of what they earned to Wendy's to cover their dinner there. They didn't even realize what slavery they were caught up in.
I hear that a lot, and it simply isn't true. A bag of apples is cheap, so is a bag of beans, a bag of rice, a bag of potatoes, etc.
Some of the cheapest foods in the supermarket are an ordinary can of beans. Milk is cheap, too.
It is possible to lose weight eating only at McDonald's but it takes effort.
The fact that Americans drink about 40 gallons of soda a year on average HAS NOTHING TO DO WITH ANYTHING GO AWAY.
(I'd love to do the math if all caloric sodas in the USA had corn syrup removed and fake sugars added what the result would be)
How much is 40 gallons? 426 12 oz cans of soda, 35.5 dozen cans, or 256 20oz bottles of soda.
I wonder if the bad quality of the majority of tap water has an effect on soda consumption. How much less soda would we drink if every residence had on-site water filtration?
That's a complete lie. It's way cheaper to purchase healthy ingredients and cook than to get fast food. It's completely cultural.
If humans behave rationally and eating healthy is cheaper and healthier why don’t more people do it?
It's a matter of culture.
Obesity rates are also higher among poorer segments of society than wealthy, so it isn't necessarily a given that obese people will choose to eat less just because doing so will make them poorer due to higher prices.
But that's not popular to talk about; nobody likes hearing about personal responsibility anymore.
130 basepoints if you use GAAP measures so only ~7% higher margin then but clearly unilever doesn't just have higher costs but is also increasing their margin.
Sure, the distributors are different, but I'd assume it's all still Monsanto, Unilever, etc., at the end of the day anyway.
People might stop caring quite as much about individual pricing once they have enough money not to have to care.
People who have to worry "can I afford all of this once I get to the till" are very aware of how much everything costs, and they are more common than people who don't have to worry.
"Gallons" are not a universal metric:
For the US, 1 Liter of milk = 0.2641720524 (US) Gallons.
For the UK, 1 Liter of milk = 0.2199692483 (UK) Gallons.
Because this has been and still is confusing, the standard unit of liter was introduced as a universal alternative (no flamebait intended).
If you are poor and/or live paycheck to paycheck (for example due to your monthly home heating bills having gone from 400 euros to 3000 euros year over year), I can guarantee you, you pay very close attention to how much food costs.
In fact, local eggs are now cheaper than factory farm eggs around here, and chicken is getting to be equivalent in price to beef.
Even drug dealers aren't that greedy
Why did companies wait until this year to do that?