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Food Prices Are Soaring Faster Than Inflation and Incomes

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Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#331
post #285
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.

You can definitely say that the cost of living has risen at different rates for different subpopulations, but you can't say they have experienced different rates of inflation. Inflation is change in the general price level of the economy, and an economy is something that we can study at a macroeconomic level. In this sense, unless you regard a social group as being an economy on its own, with its own GDP, balance of payments, and whole set of macroeconomic variables, we can't speak of it as experiencing a particular inflation rate.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#332
post #319

Earlier quoted context omitted.

>> 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 b…

But the CPI targets a generic US consumer. I would argue that poor people have a different priority list than the rich. The US economy is increasingly polarized with a widening gap between rich and poor.

I am curious as to whether the CPI targets the average person or the average consumer. Rich people spend more. They consumer more and are therefore overrepresented in most consumer-related measurements. Is the CPI meant as a measure of the cost of living or a tool for the calculation of available spending power?

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#333
post #285
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.

>Would it not be fair to say that different subpopulations experience different effective inflation rates because they buy different things?

Inflation is measured based on the changing the value of a dollar. So no, you can't have different inflation for different people.

You can have a separate idea of a poverty line or cost of living. But that's a different concept and would need different measures.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#334
post #269

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…

Everyone knows CPI is not analogous to reality. Why would it be. Just look at house prices

Because houses are assets, which are closer to stocks than food or cars.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#335
Jeebus folks!

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.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#336

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…

> 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…

There's a ridiculous amount of misconception, FUD, and ignorance around inflation / CPI (it doesn't include housing, it overweights entertainent, it exclude food and energy, hedonic adjustments/basket substitutions make everything look artificially cheap)

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.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#337
post #302

Earlier quoted context omitted.

I’m sure these 13.5 million people in the US, who now can’t afford food anymore, wouldn’t have been such enthusiastic lockdown supporters had they realized they would pay the price themselves.

Lockdowns aren't free, but neither would ignoring the pandemic be. There's no way to avoid the cost Looking back at the Spanish Flu, https://www.inquirer.com/health/coronavirus/coronavirus-covi... showed that lockdowns ended up being cheaper than no lockdowns Unfortunately the ruling class will always find a way to trickle down costs, so it's no surprise that the poorer you are the more impacted you are. With or with…

Great statistics on a disease 5 times as fatal that raged a century ago in a world that no longer exists.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#338
post #334
post #269

Earlier quoted context omitted.

Everyone knows CPI is not analogous to reality. Why would it be. Just look at house prices

Because houses are assets, which are closer to stocks than food or cars.

Housing prices reflect the cost of shelter for literally everyone who doesn't already own a house.

Shelter is much closer to "food" than to "a piece of paper representing a stake in part of a corporation".

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#339

Earlier quoted context omitted.

So what gives? 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.

https://download.bls.gov/pub/time.series/ 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 APU000…

You made the right choice and those links were helpful.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#340
post #238
post #118

Rising food costs. Rising housing costs. Rising unemployment and stagnating wages. Another crash coming in the next couple of years?

I got massively downvoted in my other comment for pointing out that there are boom and bust cycles and that COVID just brought ours closer to one of the larger bust cycles, but in the interest of informing (I wrote that on a phone) I found a link which explains it much better than I could[0]. I highly recommend taking 30 minutes to watch it, the person speaking is a well regarded economist. [0]: https://www.youtube.c…

>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.

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