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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

#511

Post by asdff »

dominotw wrote: post #481
asdff wrote: post #475

Earlier quoted context omitted.

Cost of living.

rents are falling though. so not the same.

Rents are falling slightly in dense urban areas that were already inflated from a decades long surge (65% in LA, 30% nationally [1]), but are actually increasing in suburban areas [2]. In those areas, the increases are affecting all sectors of the market:

"Overall, CoStar data show the largest rent increases have come in higher-end properties, where average rent for a vacant unit in the Inland Empire has grown 9.3% over the last year, compared with the previous four-year average of 3.8%.

In older, more rundown properties where lower-income households are likely to live, rent is up 3.4%, compared with the previous four-year average of 4.9%."

1. https://www.latimes.com/business/real-estate/story/2019-12-2...

2. https://www.latimes.com/business/story/2020-11-23/rent-falli...

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#512

Post by georgeecollins »

em500 wrote: post #336
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…

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…

>> CPI (it doesn't include housing..

Uh no, housing is 32% of the CPI.

Source : https://arbor.com/blog/how-does-rent-factor-into-the-consume...

It doesn't track well with the experience of people on this forum because young professionals tend to live in cities with crushing rental markets, especially Silicon Valley. But the whole country, particularly thoseliving in houses not in New York or California, have a different experience.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#513

Post by andrepd »

novok wrote: post #473
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…

Is there an index that isn't a 'consumer price index' but a 'cost of living index' instead then? An index that includes the basics of life like food, energy costs, shelter, transport, education, healthcare and some basic consumer goods? I think the issue most have with CPI is it's often sold as a cost of living index by media, politicians and policy makers and it makes people feel unheard as a result. "My cost of liv…

> general 'let them eat cake' style behaviors saying that iPads are 'so much cheaper'

This is a good visualisation of which things got cheaper and others got more expensive, over the last 20 years in the USA. It shows how a "consumer price index" in which, for example, the price of tobacco is weighted at >50% the price of education, can make it seem like it's all okay.

https://cdn.substack.com/image/fetch/f_auto,q_auto:good,fl_p...

This post is also good in that it layers the hike in the price of insulin on the above graph. Be prepared to scroll.

https://insulin.substack.com/p/the-price-of-insulin-vs-the-p...

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#514

Post by pas »

kache_ wrote: post #269
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…

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

Your argument doesn't really "disprove" CPI, as it has many components - https://www.businessinsider.com/consumer-price-inflation-com...

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#515

Post by JumpCrisscross »

whoisninja wrote: post #501
JumpCrisscross wrote: post #489

Earlier quoted context omitted.

> It's completely subjective and BS Any measure of inflation is subjective. That doesn't make it B.S. Inflation is a measure on a basket of goods. There is no single basket because people buy different things. This is why there is no single CPI statistic. Find a CPI that works for you. The federally-provided ones go as fine-grained as income bracket and metropolitan area. They're extremely precise, but may not be acc…

only if you ignore what kind of impact this stupidity has on financial markets if you care about markets

> what kind of impact this stupidity has on financial markets

Almost financial market professional, including those at the Fed, is tracking multiple measures of inflation.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#516

Post by dlubarov »

owenversteeg wrote: post #500
SilasX wrote: post #313

Earlier quoted context omitted.

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...

Which was horribly tone deaf, but not incorrect: yes, technological improvements do free up money for food. According to the New York Times, in the 70s your average car would survive for 100k miles. Today you can buy a car that not only survives more than twice as long, but it has far fewer costs: engines using a tiny fraction of the oil, coolants that last the car's lifetime, spark plugs that last several times as l…

It seems like an implicit premise in that line of reasoning is that consumers have a choice: they can increase their spending if they want a quality upgrade, or they can forgo the upgrade and keep their spending relatively constant.

In some cases, though, there often isn't much of a choice. I can't buy a (new-ish) car without a rear-view camera, now that they're mandated. I can't hire a builder and tell him that I don't need GFCI outlets, or HVAC, or fire sprinklers; it's all required by code. If I wanted a ~1000 square foot house, I could have built one 50 years ago, but today my planning department wouldn't approve.

Similarly, I might have been content with the experience of using my iPhone 4 back in 2010, but I can't recreate that for much cheaper today. Even if I could buy an iPhone 4 for cheap, it no longer receives security updates, and many apps have dropped support, or at least focus their QA on newer devices.

Or I might have been content with the 2mbps connection my ISP offered back in 2000, but now their plans start at 50mbps. Even if I could find a cheap 2mbps plan, it wouldn't be as practical given the bloated state of websites today. (I mean it's doable, buy my quality of experience would be much lower than it was in 2000.)

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#517

Post by tastyfreeze »

ragnot wrote: post #196
adventured wrote: post #142

Earlier quoted context omitted.

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?

I don't think you need a book. When commodities are priced primarily in USD then a decrease in the value of USD leads to an increase in the number of dollars required to make the same purchase.

Increase in any price can be seen as an increase in item value or a decrease in USD value. It takes a more in depth analysis of the market to determine which is the cause of price increase.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#518

Post by whoisninja »

novok wrote: post #473
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…

Is there an index that isn't a 'consumer price index' but a 'cost of living index' instead then? An index that includes the basics of life like food, energy costs, shelter, transport, education, healthcare and some basic consumer goods? I think the issue most have with CPI is it's often sold as a cost of living index by media, politicians and policy makers and it makes people feel unheard as a result. "My cost of liv…

http://www.chapwoodindex.org/

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#519

Post by certnlyuncertn »

jackfoxy wrote: post #388

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.

IMO it's more likely a result of a global pandemic disrupting labor and supply chains combined with some unlucky weather events hurting crop yields.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#520

Post by lottin »

reedjosh wrote: post #440
lottin wrote: post #381

Earlier quoted context omitted.

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.

Yes, the average of the above for the entire economy. I agree, but the methodology of CPI does not at all match anything grounded in the averaging of the above logic. A proper measure of inflation should start from the individual level and reason from there. So if on average 1 loaf of bread is bought by a US consumer and a loaf of bread's rate of inflation is increasing(or even decreasing) by %x, and that's %y of the…

Housing and health expenditure are listed as components of the CPI [0], so it's almost certain that they're included in its calculation.

Again, inflation means an increase in the general price level. An increase in the price of bread is not inflation, because the price of bread is not the price level. It can be used as a data point to try to estimate a change in the price level, but by itself it doesn't tell us anything about the inflation rate (unless of course bread is the only good being produced in the economy).

[0] https://www.bls.gov/cpi/tables/relative-importance/2020.htm

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