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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

#531

Post by em500 »

andrepd wrote: post #513
novok wrote: post #473

Earlier quoted context omitted.

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_au…

1. The current BLS weights for Education is 3.033%, for Tobacco and smoking products 0.608%, that's 20%, not >50% [1].

2. There are around 20mln Americans in college, versus around 34mln adult smokers. Be careful about peer-group bias: how many of your friends smoke, how many went to college?

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

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#532

Post by insert_coin »

PragmaticPulp wrote: post #270
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.

The article says inflation is up 1.5% overall, and 3% on food in the United States. The food inflation is partially due to increased shipping costs for food, due to increased demand on goods overall. This is demand-pull inflation > 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 soaring food inflation refers to developing countr…

> This is demand-pull inflation

This is not demand-pull inflation. People are not eating more than they were a few months ago.

This is supply constraints making their way up the chain, constraints in the supply of shipping and in the supply of produce.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#533

Post by kbelder »

andrepd wrote: post #513
novok wrote: post #473

Earlier quoted context omitted.

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_au…

Maybe the Libertarian in me is coming out when I look at that chart, but it sure seems that the sectors of the economy that increased in price the most are also the most regulated and subsidized.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#534

Post by insert_coin »

hitpointdrew wrote: post #375
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.

"Food Prices are soaring faster than inflation"....Food Prices soaring IS inflation.

Technically no. Prices rising, or falling are a byproduct of the inflation/deflation caused by the actions of a central bank.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#537

Post by jcfrei »

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.

That's not true at all. Central banks have tried to stoke inflation for close to a decade now without success. The reason behind the current rise is just what the article mentions: "poor weather, increased demand and virus-mangled global supply chains". Or maybe you are confusing the actions by the federal government (stimulus checks) with those of the central banks (QE). The former most likely does have inflationary effects - the latter hasn't had an effect for well over 10 years by now.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#538

Post by jjav »

em500 wrote: post #521
CyberRabbi wrote: post #486

Earlier quoted context omitted.

I have no intention of refuting his arguments. I have no strong position on the value of the CPI. OTOH I’ve noticed repeated vociferous defenses of the CPI across various Internet forums which seems out of the ordinary for me, so I’m naturally curious in what drives it. This is not trying to dismiss his argument, I just want to understand from where it’s coming because I think I’m missing something.

I have occasionally come to the defence of CPI in several threads. What drives is usually that the critic shows little knowledge about that the CPI is and/or how it's actually calculated. There are real technical issues with CPI estimations. But forum and blog posts rarely reach beyond the level of "everything I bought/want to buy is getting more expensive faster than the CPI, so it must be bogus". It triggers me in…

This is because media and government (in various computations) use CPI when talking about inflation, so it is natural for them to become used interchangeably.

Since CPI doesn't reflect inflation, it is natural to criticize it for failing at that. Maybe it was never meant to reflect inflation, but that seems about as futile as trying to argue for the proper, original meaning of the term "hacker", not what media made it to be.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#539

Post by mellavora »

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.

If you don't have a clue, then staying in cash is probably your best option.

John Hussman has a nice article on the option value of cash. https://www.hussmanfunds.com/comment/mc201201/

tldr: Suppose I offer you a security that will pay $100 two days from today. You can buy as much of it as you like today at $50, or you can wait until tomorrow. Tomorrow, I’ll flip a coin. If it’s heads, I’ll sell you the security at $99. If it’s tails, I’ll sell you the security at $25. What should you do?

Clearly, if you buy the security today, you’ll double your money two days from now. That’s a 100% expected return for each dollar you invest, over that 2-day period. If you wait, you’ll earn nothing on the first day, but you’ll then have two possibilities. If heads, you’ll get just 1% on your invested money. If tails, you’ll get a 300% return, quadrupling your money. With a 50/50 chance at each, your expected return for every dollar you invest is 0.51% + 0.5300% = 150.5%. So waiting adds 50.5% to your expected return over that 2-day period.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#540

Post by jjav »

gruez wrote: post #401
QuadmasterXLII wrote: post #254

Earlier quoted context omitted.

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

>Its probably being cancelled out in the basket by healthcare and education prices skyrocketing. Oh wait. If you go to bls's site, you can easily tell what it's being canceled out by. From the looks of it, it's mostly being canceled out by low energy prices. https://www.bls.gov/cpi/tables/supplemental-files/home.htm

Electricity prices have gone up substantially last 10 years.
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