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Food Prices Are Soaring Faster Than Inflation and Incomes

bloomberg.com

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Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#191

Post by Wolfenstein98k »

0x008 wrote: post #186
Wolfenstein98k wrote: post #178

" Food Prices Are Soaring Faster Than Inflation and Incomes " ...Food price rises ARE inflation!

We should say "food prices are soaring faster than the average price of the consumer price index basket."

I agree. I may be being pedantic, but I think food prices are (or should be) the first and most important component of what we measure inflation with.

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.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#192

Post by PragmaticPulp »

DecoPerson wrote: post #4

After reading this article, I want to stock up on more food for myself and my five dependents. Double our reserves of biscuits, cereals, frozen meat, frozen bread, canned food, preserves, long-life milk, honey, multivitamins, MREs, etc etc. Is this panic buying? Is it OK? Does it hurt other people? I’d be interested to hear some different points of view.

This article and the associated study are about food costs in developing nations like Indonesia.

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.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#193

Post by uxp100 »

mnw21cam wrote: post #140
Broken_Hippo wrote: post #81

Earlier quoted context omitted.

Food consumption changes: Pre-pandemic, a good amount of meals would be eaten out of the house. School lunches, breakfast on the way to work, lunch break at the work cafeteria or a fast food place (sure, some folks bring lunch, but many places don't offer a break room that is adequate). All of this - and things like toilet paper - shifts to consumer goods instead of bulk goods, which takes different equipment and pro…

In the UK, last year we had a terrible shortage of bread flour in the supermarkets. 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…

Yes, similar in the US. First all flour was sold out, then as it became available again it was bulk bins first, and then brands that sold in 1 and 5 pound bags last.

Interestingly (well kinda) the similar yeast shortage is still not back to normal. The shortage was partly related to packaging and the yeast at my grocer is still in the post COVID foil packaging and not in the packages it was before. (Luckily I had yeast in the freezer)

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#194

Post by Wolfenstein98k »

lottin wrote: post #188
Wolfenstein98k wrote: post #178

" Food Prices Are Soaring Faster Than Inflation and Incomes " ...Food price rises ARE inflation!

Food price rises are not inflation. Inflation is an increase in the general price level, and specifically it's not an increase in the prices of a selected set of goods.

There is no significant inflation measure that does not include food.

I agree they're not the entirety of the basket, but they are a core component.

There is no "general price level".

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#195

Post by maxerickson »

OscarCunningham wrote: post #190

Which prices are increasing slower than inflation to counteract this? EDIT: It's energy. https://www.bls.gov/cpi/

Inflation indexes don't give a lot of weight to short term price changes. So there doesn't necessarily have to be anything offsetting it. If prices stay high it should show up in inflation.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#196

Post by ragnot »

adventured wrote: post #142
H8crilA wrote: post #121

Earlier quoted context omitted.

Surely you're familiar with the Baltic Dry Index, an index of shipping costs: 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.

Which was all caused by an extremely large drop in the dollar. Anytime there is such a drop, you get global food chaos from a big spike in the price of commodities that destabilizes markets until they're able to adjust. And then you get civil wars out of that inevitably, it helped to cause the Arab Spring as one example. The US Dollar Index was at 120 in early 2002, and then proceeded to fall persistently until the m…

I'm just beginning to learn about investing...Is there any book and/or website to learn about how the dollar can affect commodities that you would recommend?

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#197

Post by lupire »

adventured wrote: post #142
H8crilA wrote: post #121

Earlier quoted context omitted.

Surely you're familiar with the Baltic Dry Index, an index of shipping costs: 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.

Which was all caused by an extremely large drop in the dollar. Anytime there is such a drop, you get global food chaos from a big spike in the price of commodities that destabilizes markets until they're able to adjust. And then you get civil wars out of that inevitably, it helped to cause the Arab Spring as one example. The US Dollar Index was at 120 in early 2002, and then proceeded to fall persistently until the m…

Its amazing that a 50% drop in the dollar was barely detectable in US, due to price stickiness, subsidies, and whatever else.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#198

Post by PragmaticPulp »

Wolfenstein98k wrote: post #178

" Food Prices Are Soaring Faster Than Inflation and Incomes " ...Food price rises ARE inflation!

From the article:

> 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.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#200

Post by bitexploder »

Cthulhu_ wrote: post #157
european321 wrote: post #150

Earlier quoted context omitted.

Most shipping companies in the stock market have rocketed in the past 2-3 months, so that opportunity has passed I think.

Common stock advice: if you hear about an investment opportunity, you've probably already missed out. 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 retu…

Bitcoin has different fundamentals IMO. For buy and hold I still think 10x from here (over the long term) is possible. This year we might see up to 100k. It’s extremely fickle. We could easily see 5k again. No one really knows, though. The best fundamental analysis that gives a bright future is of Bitcoin replacing some significant market cap for gold. Probably not though.
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