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Inflation: Food prices are going up — and at levels Americans haven't seen in decades

edited March 31 in Other Investing
The following is a current National Public Radio report:
The United States Department of Agriculture released an update to its Food Price Outlook for 2022 and found that nearly everything one might ingest – whether it comes from the grocery store or restaurant – is going up in price.

And yes, that's on top of the price increases consumers have already been forced to endure in the last year.

"All food prices are now predicted to increase between 4.5 and 5.5%," the USDA's Economic Research Service explained in the March report.

While the overall increase is alarming, a closer look at various food categories show just how expensive shoppers can expect items to get, according to the USDA:

Beef and veal: +16.2%
Pork: +14%
Poultry: +12.5%
Fish and seafood: +10.4%
Eggs: +11.4%
Dairy: +5.2%
Fats and oils: +11.7%
Fresh fruits: +10.6%
Fresh vegetables: +4.3%
Processed fruits and vegetables: +7.6%
Sugars and sweets: +7%
Cereals and bakery products: +7.8%

As for take-out or dine-in menus, the USDA said those prices are predicted to go up between 5.5 and 6.5% for the remainder of this year.

Additionally, food prices climbed 7.9% for the year ending in February 2022.

This was "the largest 12-month advance since July 1981," according to the department.

The report also noted current global events that will only add to the uncertainty of food affordability, saying, "The impacts of the conflict in Ukraine and the recent increases in interest rates by the Federal Reserve are expected to put upward and downward pressures on food prices, respectively. The situations will be closely monitored to assess the net impacts of these concurrent events on food prices as they unfold."

Comment: "Downward pressure on food prices"? From what?

Comments

  • Howdy folks,

    The real cause of inflation is the $7 TRILLION the Fed has dumped on the economy since the pandemic started. Sure, there are companies that have taken advantage to raise prices, the vast majority of the inflation in prices is actually a deflation in the value of the currency. And sure, the dollar is doing well, but it's the least dirty pair of sox in the hamper. Oh, and BTW, inflation in the rest of the world is a minor issue.

    https://www.dailynews.com/2022/03/31/inflation-the-result-of-sticker-shock-on-government-spending/

    https://www.foxbusiness.com/politics/government-spending-inflation-spike-san-francisco-federal-reserve

    and so it goes,

    peace,

    rono
  • >> Oh, and BTW, inflation in the rest of the world is a minor issue.

    Pandemic, and now war, induced inflation is a global phenomenon

    https://www.global-rates.com/en/economic-indicators/inflation/inflation.aspx

    https://www.ft.com/content/6fc23069-6184-4a29-9691-130c83d29349
  • Howdy,

    Thanks @orage. It'll be curious to see how things pan out over the next year or so.

    best,

    rono
  • Hearing March inflation numbers will be at 70 year high.... April inflation numbers likely over 10%

    Seems unreal to even type that... what will the general public think about that...

    Best

    Baseball Fan
  • edited April 4
    I don’t think we’ll see anything near 10% Y/Y inflation (CPI) this year or next. As for the “general public” I have little faith in their understanding of money, markets, financial planning. We’ve been dumbed down and polarized as a society compared to the 70s..

    However, I don’t recall that inflation was much of a “hot button” issue 70s thru 80s. ISTM most took it in stride along with all the other pieces of the economic puzzle. Among those: jobs, wages, perks (like retirement benefits and health insurance), the stock market, quality of public services and infrastructure and educational opportunities. So it was an issue. But not a “hot button” one.

    PS - Along with the inflation of the 70s & 80s there were several U.S. manned lunar landings and other advancements in space - something to be really proud of as a nation. And it was perhaps the genesis period for what later became the technological revolution. Loved my first computer - a Vic 20 (early 80s).
  • You heard wrong. Y/Y inflation for 1952 (70 years ago) ranged from a high of 4.3% (Jan) to a low of 0.8% (Dec). Not a year of high inflation.

    Y/Y inflation remained below 5% until the spring of 1969. The only double digit Y/Y figures come from 1974-1975 and 1979-1981, peaking at 14.8% in March 1980. I'm sure those periods ring economic bells for some people.

    My data source is the Bureau of Labor Statistics: https://data.bls.gov/cgi-bin/surveymost
    (Select "More Formatting Options", and then select the checkbox "12 month percent change")

    What is your source?
  • I'm of the belief that once the drilling and production of fuel ramps up, the price of oil subsides and supply chain issues abate that inflation will start to come under control. When that'll happen I haven't a clue.
  • Hearing March inflation numbers will be at 70 year high.... April inflation numbers likely over 10%

    Seems unreal to even type that... what will the general public think about that...

    Best

    Baseball Fan

    That doesn't seem right. The inflation rate in 1952 was .8%. The highest inflation rate since then was 18% in 1980.

    https://www.thebalance.com/u-s-inflation-rate-history-by-year-and-forecast-3306093
  • The Balance page says that the 1952 inflation was 0.8% (not 8%). That was the Y/Y rate for December 1952 as I noted above. In all other months of 1952, e.g. Nov 1951 - Nov 1952, the Y/Y inflation rate was higher. But always 4.3% or less for the months in 1952.

    Balance says that the 1980 inflation was 12.5%. The 18% figure that you're quoting is the Fed Funds rate. If you mouse over "footnote" 5 (Inflation YOY), you'll see it describes the same source and procedure for finding inflation that I described above.
  • I have been a food buyer in the grocery business for forty years. Currently our average case cost is up 13.9% year over year with more price increases coming everyday. If the current tend continues look for a 20% or more food inflation this year.
  • edited April 5
    @Ken- Thanks for the reality check. I've been trying to point this out here for a long time, but keep hearing about BS "official" statistics as a response. "Oh, but food is a 'volatile' statistic, so we don't count that."
  • Housing price inflation is also not reflected in inflation indexes (CPI, PCE). This is because housing is accounted for through a mechanism of owners' rent equivalents, and rents are beginning to move up with some lag. So, when that fully kicks in, that will keep inflation elevated.

    Inflation is rate of change in prices. So, if food and energy stabilize at higher price levels, inflation will go down but prices will remain high.
  • @ken. +1

    To my point regarding what the public thinks. Govt can spin it, sound bite it, fog, deflect blame,try to BS it, etc...but you cannot BS reality

    Especially when you grocery shop once a week, buy gas once a week, pay utilities monthly

    Inflation really could be well into double digits

    Don't worry...I'll stay away from political commentary

    Invest wisely and appropriately

    Baseball Fan
  • Howdy folks,

    I buy chicken breasts at GFS. Over the past 18 months, they've more than doubled from $14.99 to $31.99.

    Oh and before we all blame everyone else, the Fed has injected some $6 TRILLION into the economy with pent up demand and supply issues. duh.

    and so it goes,

    peace,

    rono
  • Used to be you had to go to a major league baseball game to get "sticker shock"..."how much you want for that beer, $12 bucks? Huh?" Now you walk into the grocery store to Rono's point...and you get the same kind of sticker shock...the "huh, that costs that much" thought.

    Really feel for those who are on a limited budget and have kids at home to feed.

    What a mess! This would be a real good time to those of us who have had financial success in life to maybe buy an extra week or two's worth of groceries and donate to their local food bank.

    Good Luck to ALL,

    Baseball Fan
  • Here's a tiny bit of anecdotal information from someone within the industry that provides some perspective on recent inflation affecting groceries. The source of rising prices identified here is not necessarily what I would have expected:

    “I would say logistics is the number-one reason we are having inflation. It’s very difficult to find drivers, and wages are going up. Fuel surcharges are through the roof. The freight to get goods to the consolidation points has doubled since pre-pandemic. The cost of packaging goes up because it’s shipped to the producers. Even ocean freight has doubled compared to pre-pandemic. We mostly use our own trucks and drivers, but because of the driver shortage, if someone calls out sick, a route doesn’t go out. We’ve had new trucks on order for almost a year. This shortage of drivers, trucks and truck parts for repairs makes freight more expensive and service much worse. It seems crazy that we would be paying double the freight for far worse service, but there it is.”
  • Bingo! Here's excellent substantiation from NPR:

    Walmart will train scores of warehouse workers as truckers, starting at up to $110,000
    NEW YORK — Walmart workers who once unloaded trucks now have a chance to drive them.

    The nation's largest retailer has launched a training program that gives employees who work in its distribution or fulfillment centers a chance to become certified Walmart truck drivers through a 12-week program taught by the company's established drivers.

    Walmart, based in Bentonville, Arkansas, also said it is raising pay for its 12,000 truck drivers. The starting range for new drivers will now between $95,000 and $110,000, according to Walmart spokeswoman Anne Hatfield. The retailer said that $87,500 had been the average that new truck drivers could make in their first year.

    The moves announced Thursday come as the pandemic has made trucker shortages more severe as demand to move freight reaches historic highs. The American Trucking Associations, a large industry trade group, estimates that the nation is short about 80,000 drivers.

    Walmart said about 20 workers in Dallas and Dover, Delaware, have earned their commercial driver's licenses. About 400 to 800 workers in the company's supply-chain network are expected to complete the truck-driving program this year, Hatfield said.
  • And a world-wide perspective via NPR:

    Global food prices hit their highest recorded levels last month, driven up by the war

    Excerpts from that report:
    A United Nations agency says the war in Ukraine sent food commodity prices soaring in March to the highest levels it has ever recorded.

    The Food and Agriculture Organization announced on Friday that its FAO Food Price Index, which tracks monthly changes in the international prices of a "basket of commonly-traded food commodities," averaged 159.3 points in March. That's up 12.6% from February, which already saw the highest level since the organization began tracking in 1990. It's also 33.6% higher than it was last March.

    Russia and Ukraine collectively accounted for about 30% of global wheat exports and 20% of maize exports over the last three years, the organization said, with conflict-related export disruptions in both countries prompting a surge in global prices of wheat and coarse grain. The FAO Cereal Price Index was 17.1% higher in March than it was in February.

    "The expected loss of exports from the Black Sea region exacerbated the already tight global availability of wheat," the organization added. "With concerns over crop conditions in the United States of America also adding support, world wheat prices rose sharply in March, soaring by 19.7 percent."

    It also notes that Ukraine is the world's leading exporter of sunflower seed oil, and says the rising prices of sunflower seed oil and crude oil raised the prices of other vegetable oils, like palm, soy and rapeseed. Altogether, the FAO Vegetable Oil Price Index rose 23.2% in a month.

  • edited April 8
    sfnative said:

    Here's a tiny bit of anecdotal information from someone within the industry that provides some perspective on recent inflation affecting groceries. The source of rising prices identified here is not necessarily what I would have expected:

    “I would say logistics is the number-one reason we are having inflation. It’s very difficult to find drivers, and wages are going up. Fuel surcharges are through the roof. The freight to get goods to the consolidation points has doubled since pre-pandemic. The cost of packaging goes up because it’s shipped to the producers. Even ocean freight has doubled compared to pre-pandemic. We mostly use our own trucks and drivers, but because of the driver shortage, if someone calls out sick, a route doesn’t go out. We’ve had new trucks on order for almost a year. This shortage of drivers, trucks and truck parts for repairs makes freight more expensive and service much worse. It seems crazy that we would be paying double the freight for far worse service, but there it is.”


    Along with the above, a surplus of paper money ... A lots folks got “rich” trading stocks & crypto...


    image

  • edited April 9
    From Saturday’s WSJ:

    “Walmart is paying up to keep on trucking. The retail giant is offering truck drivers up-to-$110,000 starting salaries and expanding a training program that enables its employees to enter the field to grow its in-house fleet.”

    Also noted in this WSJ issue: Warren Buffett has built up an 11% stake in HP.
  • WB held IBM for a long time before he realized it has no competitive advantages or wide moat. He sold IBM later. He bought Apple (and lot of them) and this turns out to be a right pick. HP appears to me is more like IBM, hope WB proves me wrong.
  • Yes, I agree. I would think that Intel is a better bet going forward than HP. Intel is investing heavily in new manufacturing facilities, and their "moat" is the value of their intellectual property in the ongoing design and production of ever-more complex chip technology.

    On the other hand, Apple is moving away from Intel technology and is investing in it's own intellectual design facilities. But I have no idea if Apple intends to manufacture advanced chips for use by anyone else, or intends to keep all of it's design and production for it's own private use.
  • Used to be you had to go to a major league baseball game to get "sticker shock"..."how much you want for that beer, $12 bucks? Huh?" Now you walk into the grocery store to Rono's point...and you get the same kind of sticker shock...the "huh, that costs that much" thought.

    Really feel for those who are on a limited budget and have kids at home to feed.

    What a mess! This would be a real good time to those of us who have had financial success in life to maybe buy an extra week or two's worth of groceries and donate to their local food bank.

    Good Luck to ALL,

    Baseball Fan

  • I was thinking the same thing!! Unfortunately there s many poor people here in NH_ rents have skyrocketed
  • @old_Joe, agree that Intel would be a better choice and there are few others too.

    Apple moved away Intel X-86-based chips to other advanced (faster and low power consumption) architectures, M1 for their computers. M1 chips are designed by ARM, a British company who supports the A1 chips for iPhones and iPads. And the chips are manufactured by Taiwan Semiconductor Manufacturer. There is already a second generation, M1 Ultra and M1 Pro chips in the latest MacBook Pro and iMac.
    https://macrumors.com/guide/m1/
  • @msf, thanks for the corrections. I must have been typing slowly and wrongly while you were posting quickly and accurately.

    Or I need to have my eyes checked.
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