About grocery inflation
Kevin Drum has a timely post on grocery inflation. Overall, it’s at 1% now.
“Why do so many people still think inflation is high? It’s because they don’t respond to averages. They respond to outliers.”
*snip*
“Frozen juice is up 27%. Baby food is up 9%. Ground beef is up 6%. When you shop for groceries, these things are going to stand out.
“Now, it’s also true that eggs are down 17%. Apples are down 10%. Fruits, vegetables, chicken, and dozens of other items have been flat. But you don’t really notice that. You notice the occasional item that’s way higher than it used to be.”
Frozen juice inflation is due to citrus greening disease in Florida and a poor Southeast Asian sugar crop. Egg prices are about to go up since 1.6 million hens have been culled because of bird flu.
Also too, from the comment thread:
“ . . . some people think that inflation is another word for high prices. When inflation moderated in the early 80s, shoppers in stores interviewed for one news program said basically, ‘What do you mean inflation is down? Prices haven’t gone down.’
“Then there are all the times over the years I’ve seen newscasters stating that ‘inflation went up again last month’ when the latest inflation figures are released, even if inflation was lower than in the previous month. People are conditioned to think that higher inflation means higher prices, period, rather than the more complex idea of a faster rise in prices than in the previous period.”
Grocery inflation is low
“Why do so many people still think inflation is high? It’s because they don’t respond to averages. They respond to outliers.”
*snip*
“Frozen juice is up 27%. Baby food is up 9%. Ground beef is up 6%. When you shop for groceries, these things are going to stand out.
“Now, it’s also true that eggs are down 17%. Apples are down 10%. Fruits, vegetables, chicken, and dozens of other items have been flat. But you don’t really notice that. You notice the occasional item that’s way higher than it used to be.”
Frozen juice inflation is due to citrus greening disease in Florida and a poor Southeast Asian sugar crop. Egg prices are about to go up since 1.6 million hens have been culled because of bird flu.
Also too, from the comment thread:
“ . . . some people think that inflation is another word for high prices. When inflation moderated in the early 80s, shoppers in stores interviewed for one news program said basically, ‘What do you mean inflation is down? Prices haven’t gone down.’
“Then there are all the times over the years I’ve seen newscasters stating that ‘inflation went up again last month’ when the latest inflation figures are released, even if inflation was lower than in the previous month. People are conditioned to think that higher inflation means higher prices, period, rather than the more complex idea of a faster rise in prices than in the previous period.”
Grocery inflation is low
I watched an interview this morning on CNBC. The guest basically stated in the interview that the massive immigration over the last couple of years is filling the labor shortage gap and keeping wage inflation down. That also jives with recent labor reports that show the majority of new hires are not natural born citizens. I’ll leave it to you to opine who the winners are here.
@Bill M,
Hmm. My opinion doesn’t matter. Let’s examine the evidence:
“Politicians, the media, and the public express concern that immigrants depress wages by competing with native workers, but 30 years of empirical research provide little supporting evidence to this claim. Most studies for industrialized countries have found no effect on wages, on average, and only modest effects on wage differentials between more and less educated immigrant and native workers. Native workers’ wages have been insulated by differences in skills, adjustments in local demand and technology, production expansion, and specialization of native workers as immigration rises.”
https://wol.iza.org/articles/do-immigrant-workers-depress-the-wages-of-native-workers/long
In the Chicago area, unions complain about losing jobs, as opposed to declining wage rates. This is particularly true in the trades such as roofing. I don’t know that any systematic studies of the issue locally have been done.
Last roofing job, the el heffe had a crew of Guatemalans, all good with heights, and slope. About 5 years ago, but I don’t use landscapers so only have observed the possible new immigrants.
I did the groceries for the past Sunday family gathering, sticker shock!
Because I don’t know the m on m….
Most of what I buy regularly is produce, fresh fruit and vegetables. For those things my costs may even be down. Certainly if I buy the sale items. Even bacon is down a little, but most meats isn’t and some are outrageous.
But I am also old enough to remember the 70’s and early 80’s. This is a ripple not a wave.
I have noticed I can stuff more money into a grocery bag, probably because I’m better at self-bagging than the dipstick baggers. I don’t see any illegals in the supermarket so I don’t see how that could be affecting it (thought they probably would do a better job of bagging)
You must be doing something right cuz you’re attracting the best trolls …
Ten Bears:
Difference in hourly wage between domestic and foreign Labor has how much of an impact on cost in proportion to the cost of the item?
Physically in the supermarket /snark
Weird, I almost said “We” ~ as you are well aware I am well aware of Deportee’s contributions to the costs of production, and the fact that much of what we consume is in fact produced in Mexico. As noted, some things have gone up dramatically, some things have gone down; I’m not sure there’s an equilibrium there, nor are changes in shopping patterns accounted for. I’m packing more stuff in one bag, $135 today for a week’s worth of basics … probably $35 more than a year ago. I can’t put my finger on why
And then there’s that thin slice of me tucked away that thinks you’re all illegals …
Ten
of course we are. but we had to leave our own country because of the illegals coming in the other door.
and, if i recall correctly this all started when those of us who couldn’t jump had to get out of africa.
Well if it’s not impacting the price of food it must be impacting the profits of corporations. Hard to quantify.
“A Department of Labor investigation found in February that Packers Sanitation Services, a major US food sanitation company, illegally employed at least 102 children between the ages of 13 and 17. The investigation found that minors were employed in hazardous occupations and worked overnight shifts at 13 JBS and Cargill meat processing facilities in eight states.”
https://www.cnn.com/2023/09/28/business/tyson-perdue-child-labor-dol-investigation/index.html
There can be only one Bill:
No Overhead and low wages. Overhead is higher (percentage of total cost) than Direct wages in the costs. Regardless of if legal or illegal. Illegal, more savings as no Overhead and pay less. Labor is the most valuable part and part of manufacturing.
I sort of think answering questions on grocery prices serves for many people as an opportunity to express more general feelings about the moment. The results are so confounded with other interests as to be pretty hard to use. Could be the renewal of auto insurance that shocked and angered them, or that loan approval that was for $30,000 less than they actually need to get into that neighborhood with the good school. Hundreds of things. Unless it is from a pretty sophisticated polling project with all kinds of extra questions designed to ferret out “true grocery feelings”, I would not spend a lot of effort trying to rationally explain it. Also, who cares, really? Not being cynical, but whatever your feelings might be, you only have a few options: shop harder for pricing (Aldi, maybe); substitute (more pork, less beef or whatever). Grocers aren’t too worried that customers are a bit unhappy.
According to the WSJ in a front page article today food inflation is up 36% over the last five years. Sorry no link, behind the WSJ firewall.
@lj,
LOL! I’ll bet I could cherry pick a food basket that would show food inflation even higher. Look, the price of groceries (and everything else) goes up over time. The amount is goes up is greater when you look at longer time intervals. Who knew?
What affects your wallet is the ratio of input to output. What happened with wages over the last five years?
“Since 2019, the overall cost of groceries has increased 1.5% more than average wages.
“That’s not a typo. 1.5%.
“That’s all but unnoticeable.”
Really should know better than to trust the WSJ.
https://jabberwocking.com/yes-food-is-more-expensive-and-wages-are-higher-too/
i think litle john may be on to something. maybe average food inflation today is only 1%
but people still remember what they were paying a few years ago and that was a lot less.
for myself..1) i don’t eat either chicken or steak. but if i ate steak and someone told me there was no inflation because i could switch to chicken, i would call him a liar. for a lo of what i do eat,prices have about doubled…probably over the last four years. same thing is true for car insurance, state and city taxes….maybe over the last five years, maybe longer, but it still feels like inflation to me. i think i got an 8% increase in SS one year during that time, but you don’t really notice that. with more income you end up just buying more stuff. you notice higher prices.
whatever is really going on with prices, it depresses me that people will vote for a monster because they blame a reasonably good President for inflation.
related: american prospect reports that people think the economy is good in their state but bad in the nation. why is that? because they hear it on the news. never underestimate the value of lying to the people.
Yeah Joel let me elaborate since I can’t link to the article. They bought $100 of various groceries at 2019 prices. Sugar, bread, eggs, liquid dish detergent, etc. Then they bought those same products today. It cost $136 in today’s prices. Seems pretty simple. Maybe they fiddled with it somehow, but it is an interesting article and may help explain some of the anxiety reflected in opinion polls.
Thanks for the link Joel. Now I get Kevin’s argument. The WSJ article may be accurate but wages have increased more than inflation. Similar to Mr. Roth’s post a week or so ago. I’m sensing a theme.
But I think Mr. Coberly is right.
well, 36% in five years is a rate of 7.2% per year, which would double prices in ten years.
i am of an age where 10 years feels like a lost weekend.
ao, yes, people would notice that if they are old. young people don’t notice anything.
still, it’s better than 7% unemployment.
Is this accurate ?
https://www.breitbart.com/economy/2024/04/05/analysis-grocery-prices-nearing-40-percent-higher-than-2019/
@Jackson,
It is if you cherry-pick which groceries you count. That’s how the WSJ did it. If you read your link, Breitbart is just quoting the WSJ. Here’s why you should ignore them both: https://jabberwocking.com/yes-food-is-more-expensive-and-wages-are-higher-too/
Thanks –I do try to read all sources of information rather than self censor.
@Jackson,
I do try to avoid propaganda rather than read uncritically. YMMV.
my own track record has not been good lately, so i have some trepidation about saying this:
I looked at the article cited above as a reason to ignore WSJ (which i do have reason to ignore on a subject i know about). But I also read the comments disagreeing with the article. These seem to confirm my own experience and “analysis” suggested in my comments above. I guess it’s a question of cherry picking which propaganda one does not read uncritically.
there IS a substitute for eggs, but if I have to find a cheaper substitute, I am responding to inflation…of egg prices at least. and whether or not my “my wages have kept up” wage-price spiral is by definition “inflation” and 1)people notice price increases more than they notice their wage increases 2) not everyone is getting a wage increase, and 3) not all prices increase at the same rate.
Administrative note: This is a post about grocery store inflation, not about Joe Biden. It is not an open thread. Any off-topic comments will be deleted.
Grocery prices went up a lot during the covid pandemic.
No surprise. No surprise that they haven’t come down either, really.
Remember how gas prices exploded after the Arab-Israeli War of 1973?
Probably not.
“Oil prices quadrupled during a Middle East war in the 1970s.”
Yom Kippur War – 1973
Milestones: 1969–1976 – Office of the Historian (state.gov)
They kept going up after that.
Gas prices now are about ten times what they were before 1968.
Housing prices went up accordingly. Eventually, wages & salaries followed, sort of.
Ok, ‘they haven’t come down much either, anyway.’
@Fred,
“Gas prices now are about ten times what they were before 1968.”
Anyone who understands anything about economics knows that comparisons over time in nominal dollars are meaningless.
The national avg gas price in 1968 *in 2022 dollars* (real dollars) was $2.86. The national avg gas price last month was $3.53.
@Fred,
Not to put too fine a point on it, median income in the US in 1968 was $7700. Median income in the US in 2021 was $40,480.
If I just cite it like you did, in nominal dollars, that looks like a huge gain, right?
But if you do the comparison the way a responsible economist would (no calculus required), $7700 in 1968 was $64,754 in 2022.
I’ve lived 2/3 of my life in Massachusetts. My annual income in 1970 was about $8K, as an E-5 Army electronics instructor. It peaked about 30 years later at about $64K. The house we purchased in 1978 cost $80K, now it’s worth about $800K. Along the way, we put a lot of money into 401K holdings. So, we are still doing ok.
Seems like gas prices are now over 10 times what they were in 1968. And the dollar is now ‘worth’ ten times what it was then, due to inflation, I would say.
Now, the US heartland tells a different story, one I did not experience.
But my point was that unpleasant surprises, like wars & pandemics, can have horrible effects on the economy. So be it. This happens all too often,but it seems people are stunned every time.
Dobbs
I think you are on to something. Every generation has its troubles. That’s why hate to see this one crying about an increase in the payroll tax to pay for their longer lifespan.
or feeling abused by having to pay a tax on a tax, which isn’t, on something that isn’t.
the best deal working people ever got is about to be ended because they are sure someone else is getting a better deal.