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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

#311

Post by hedora »

mistermann wrote: post #175
adflux wrote: post #17

Earlier quoted context omitted.

Sure, almost all 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 and neither do many other economists. Stock prices, house prices and now, at last, commodity prices have gone through the roof... But you're probably earning about as much as you were a year ago, or less, if your industry was affected... It's not just…

Asking for investment advice in a forum is probably not the best idea, but does anyone have any advice for someone who's been sitting almost entirely in cash for over 2 years (including missing the covid rebound)? I have a fair amount of experience in the market but from an intuition perspective, I feel like I have alzheimer's or something, I haven't a clue what a person should do in this situation.

Don’t try to time the market. Just put the money in a diversified portfolio at a roboadvisor.

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.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#312

Post by evrydayhustling »

PragmaticPulp wrote: post #286
evrydayhustling wrote: post #273

Earlier quoted context omitted.

Disagree that this is alarmism. The question is whether the way inflation is being measured matches the way we use it to make decisions. Graphs like AEI's Chart of the Century [1] have been highlighting for years that inflation numbers are inappropriately averaging decreasing costs for discretionary purchases, while costs for essentials like healthcare and education grow out of control. When food also starts outpacin…

The food inflation number was isolated in the article to be around 3%. Much of that increase can be traced back to increased shipping costs during COVID lockdown. Monetary policy isn’t the only or even the primary driver of inflation. In this case, the inflation comes from increases demand on a portion of the food supply chain (shipping services). The alarmism in the comment section largely comes from people misreadi…

The article also discussed the fact that US prices are temporarily buffered by the supply chain but that big providers like GM are discussing price increases do to sustained cost increases. This is alongside existing practices like shrinkflation that make it harder for a CPI to accurately benchmark costs. It makes sense that articles and readers are looking for leading indicators.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#313

Post by SilasX »

QuadmasterXLII wrote: post #254
bfrog wrote: post #239

So housing and food has gone up dramatically, but still "inflation is low" is the story. Doesn't and hasn't passed the smell test in a decade.

Its probably being cancelled out in the basket by healthcare and education prices skyrocketing. Oh wait.

No joke, back in 2011, a Fed executive insisted that iPad deflation was canceling out higher food prices. Not even that iPads were getting cheaper, just, new ones had faster CPUs, so their effective price was lower. (Which somehow frees up more money for food?)

https://www.reuters.com/article/us-usa-fed-dudley-ipad-idUST...

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#314

Post by sudosysgen »

luxuryballs wrote: post #138
dijit wrote: post #131

Earlier quoted context omitted.

Are you kidding. There will be an insane recession, if not a depression. 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.

These boom bust cycles are caused by fiat money, inflationary debt/spending, government stimulus and over regulation that causes false market signals and creates bubbles, it’s not a capitalism problem, capitalism would be the solution.

You have to face reality at some point. Literally every single capitalist economy, any time, anywhere, with or without fiat money, at all practically possible levels of stimulus, and regulation, has gone through a boom/bust cycle.

If anything, they got better since the introduction of Keynesianism, not worse.

It's inherent to capitalism. Don't try to delude yourself.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#315

Post by fennecfoxen »

whoisninja wrote: post #297
fennecfoxen wrote: post #291

Earlier quoted context omitted.

> CPI is absurd, it only perpetuates consumerism and punishes savers. 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 sus…

do you realize all the calculations use CPI? the bond market is highly manipulated because of that, why have a market then? why are retail accounts in germany, netherland already negative rates? does that make sense to you? can banks make money that way? danger of nationalization of banking? personal beef? no. I thought this is a forum for civil discussion and reasoning?

> do you realize all the calculations use CPI?

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.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#316

Post by reedjosh »

lottin wrote: post #209
randerson wrote: post #128

Earlier quoted context omitted.

Don't forget soaring stock prices too. Sure all feels like inflation to me.

Sure, but inflation is not a feeling. It needs to be estimated using a statistical methodology.

Sure, but inflation should be viewed as individual vectors.

Each vector corresponding to a delta of price and time in a generalized location for a specific good.

Something like the CPI cannot be a hard science as it refuses to acknowledge that each and every person will experience inflation based on the inflationary vectors of goods and services multiplied by a persons relative use of said goods and services.

Every person experiences a unique inflation rate, and to try and average that in something as wholly simplistic as a basket of goods is pure chicanery aimed at making this topic intractable.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#318

Post by SpicyLemonZest »

ben_w wrote: post #285
lottin wrote: post #228

Earlier quoted context omitted.

Call it a price rise. But it's not inflation. You don't get to re-define what economic concepts mean.

Would it not be fair to say that different subpopulations experience different effective inflation rates because they buy different things? Seriously, would it? I’m not an economist. I am aware of RPI/CPI, and inflation is measured independently in different countries within the Eurozone, so it’s not like we can’t have multiple measures for different purposes or populations.

The concept of inflation is an attempt to measure price increases that are due to general monetary factors, as opposed to price increases that are due to market forces in specific industries. It’s fair to try and measure the practical household budget of a typical family, and many governments do, but calling this measurement “inflation” tends to mislead people into thinking that any increase must be because there’s an oversupply of money.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#319

Post by em500 »

sandworm101 wrote: post #284
KptMarchewa wrote: post #277

Earlier quoted context omitted.

Why? Food prices are usually few percent (6-18% in the western countries) of total household expenses. If you want to look at something that impacts people way more, look at rent or house prices.

>> Food prices are usually few percent (6-18% in the western countries) of total household expenses. Maybe for rich people. If you have an income of 2000/month, with the first 1000 or so going to rent, food is likely your second largest expense.

Here are the most recent weights for official US CPI calculations: https://www.bls.gov/cpi/tables/relative-importance/2020.htm

Housing is by far the largest component (42%) (contrary to the common misconception that housing is not in the CPI), followed by Food and Beverages (15%) and Transportation (15%). If you want to up-weight food, you must necessarily down-weight some other component. The prime candidate would be shelter (most other categories are already much smaller than food), but that's of course not the answer that CPI-doubters are looking for.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#320

Post by fennecfoxen »

ErikAugust wrote: post #243
whoisninja wrote: post #237

CPI is a joke, they do something called hedonic adjustments to things like tech products etc. It's completely subjective and BS. Technology is deflationary, things should get cheaper because we go after producing them in creative ways one demand is high. 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 efficie…

Real question that nobody has yet answered: With what data CPI is even calculated? The data sources are all hidden. Related: https://news.ycombinator.com/item?id=26259279

The data are all over bls.gov, in far more detail than you will find convenient for processing. See my remarks down the page: https://news.ycombinator.com/item?id=26386293

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".

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