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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

#381

Post by lottin »

reedjosh wrote: post #316
lottin wrote: post #209

Earlier quoted context omitted.

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 p…

That would be the cost of living for a particular person. Inflation is not that. It's literally a change in the price level of an economy, and what they are trying to measure is exactly that.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#382

Post by dragonwriter »

pwm wrote: post #363
em500 wrote: post #336

Earlier quoted context omitted.

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 abo…

I'm not an economist. My layman understanding of inflation is that it is the measure of change of purchasing power a unit of currency has over time. I think most laymen, including myself, questions how this rather theoretical concept is actually measured in real life. Eg. I think it is a sensible expectation that if inflation was said to be 2% for 20 years then I should be able to buy a house that cost $200K 20 years…

> My layman understanding of inflation is that it is the measure of change of purchasing power a unit of currency has over time.

That's loosely correct; but general inflation is the change in purchasing power for currency buying final consumer goods and services, not assets which are intermediary stores of value. Purchased homes are assets (actual or foregone but using a home you own yourself) rents are consumption expenses.

> I think it is a sensible expectation that if inflation was said to be 2% for 20 years then I should be able to buy a house that cost $200K 20 years ago for ~$300K now

It's not. Specifically, that would be the fallacy of division, even if your basic understanding of inflation was correct. The change of an aggregate is not identical to the change in every subset of the aggregate.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#383

Post by fennecfoxen »

sudosysgen wrote: post #305
bradleyjg wrote: post #288

Earlier quoted context omitted.

1.8% (housing) and 3% (food) are dramatic increases to you? You would not have liked the 80s.

Where do you get 1.8%? Do you mean 1.8% over inflation? Because the nominal increase is of 4.3%, and that was during a pandemic year with a rent moratorium, it seems to be increasing even faster. But 2% per year faster than inflation is already quite bad. Remember, this is exponential.

> the nominal increase is of 4.3%, and that was during a pandemic year

Well, of course. Using office space in many areas is illegal, and even where it's not, it's unwise. People are substituting residential-housing space, instead, so demand is way, way up. Construction is booming, but not so quickly as to take the edge off those prices.

> with a rent moratorium

?!?!? whatchew talkin' 'bout

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#384

Post by jbay808 »

throwawaygh wrote: post #346
dominotw wrote: post #281

Earlier quoted context omitted.

> We have lots of things to worry about -- inflation isn't one of them. I really hate this comment. I am worried about not being able to ever being afford a house for my family. Avg income in my neighborhood is ~49k but a 2 bed condo here are selling for 450K and getting outbid by 75k over the asking price. Its insane. Maybe you already own a house and are happy that prices are up. But its really weird to tell other…

> Avg income in my neighborhood is ~49k but a 2 bed condo here are selling for 450K and getting outbid by 75k over the asking price. Its insane. Sure, and your point about housing prices mattering is a good one (see my other comment on this story). But, this describes maybe a few dozen housing markets. Probably only a couple dozen if you cut out resort/ski towns. It's a regional problem, not systemic problem with the…

> But, this describes maybe a few dozen housing markets. Probably only a couple dozen if you cut out resort/ski towns. It's a regional problem

It, uh, describes all of Canada actually.

https://www.reuters.com/article/us-canada-economy-housing-an...

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#385

Post by rory »

pwm wrote: post #363
em500 wrote: post #336

Earlier quoted context omitted.

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 abo…

I'm not an economist. My layman understanding of inflation is that it is the measure of change of purchasing power a unit of currency has over time. I think most laymen, including myself, questions how this rather theoretical concept is actually measured in real life. Eg. I think it is a sensible expectation that if inflation was said to be 2% for 20 years then I should be able to buy a house that cost $200K 20 years…

Not the parent, but the answer here comes down to two simple things:

1. Home prices are not captured in CPI, only rents.

2. The headline CPI is a national number. Home price inflation has actually been somewhat tame overall in recent history (2-3% per year), but it has been very geographically uneven. Some places have experienced basically no inflation, while others have tons of it.

Here is the graph for home price inflation in the San Francisco region: https://fred.stlouisfed.org/graph/?g=BLdf . You can see that it's often double digits, and certainly much higher than any headline inflation rate.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#386

Post by jfim »

pwm wrote: post #363
em500 wrote: post #336

Earlier quoted context omitted.

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 abo…

I'm not an economist. My layman understanding of inflation is that it is the measure of change of purchasing power a unit of currency has over time. I think most laymen, including myself, questions how this rather theoretical concept is actually measured in real life. Eg. I think it is a sensible expectation that if inflation was said to be 2% for 20 years then I should be able to buy a house that cost $200K 20 years…

> I think it is a sensible expectation that if inflation was said to be 2% for 20 years then I should be able to buy a house that cost $200K 20 years ago for ~$300K now

Housing is a bit particular because it's a good that's almost always purchased on credit. You'd want to look at the monthly costs of housing (mortgage payment) as opposed to the sticker price, since the total cost that's affordable fluctuates based on the interest rate. Twenty years ago, the interest rate on a 30 year mortgage was about 8%, contrast it with the about 3% rates now.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#387

Post by Robotbeat »

pnutjam wrote: post #374
em500 wrote: post #336

Earlier quoted context omitted.

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 abo…

You forgot the quotes around "economist". Economics is still not science, it's getting closer; but the whole field ignores stuff and deals with spherical cows to simplify complexities. This, of course, makes it wildly inaccurate.

Scientists in the physical realm would NEVER approximate things as spherical cows! ;)

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#388

Post by jackfoxy »

This is the result of the central banks embracing Modern Monetary Theory https://en.wikipedia.org/wiki/Modern_Monetary_Theory as the policy to leave no hedge fund behind and lay the groundwork for UBI.

In plain English this is the fractional reserve banking system providing a cornucopia for all. It's really using debt to finance not capital creation, but current consumption. This cannot possibly end well.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#389

Post by jerf »

grumple wrote: post #103
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.

> After reading this article, I want to stock up on more food for myself and my five dependents. You should always have some amount of food reserves. Space allowing, at least a few days of food. Canned and dry goods with long shelf lives - eat the oldest of this first during regular usage and refresh the stock so you don't end up with 5 year old canned goods. > Is this panic buying? A little, yes. There's not much ri…

"It can hurt others. At the beginning of the pandemic there was a lot of panic buying."

On the other hand, having a stock on hand already can be helpful. It means you won't need to join the panic buying, because you're already stocked, and you stocked at a time when the system could easily handle it.

It is a good thing for everyone to have some supplies on hand. It makes all of society more resilient against all sorts of disasters. It means that if your area finds itself in need of emergency services, those emergency services may not have to go to you, leaving them for someone else who may be in more trouble (e.g., someone who was at the epicenter of whatever and legitimately had their supplies totally destroyed).

It is the socially responsible thing to do to have some vital supplies on hand and be able to survive independently for a few days on as few services as possible in your area.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#390

Post by fennecfoxen »

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.

"Something important is more expensive, but 'it's just that something, and not everything ever'. Doesn't pass the smell test."
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