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Here's a look at the seasonally adjusted food index on a log chart. Once again, this means constant exponential growth will show up as a straight line. I'm seeing three lines. We are firmly on line #3.
I am posting this because my local QFC is allowing me to buy 12 cans of Progresso soup on sale for 99 cents per can this week. My hoarded soup supplies are turning into something of a joke. I am not complaining though. I'll happily laugh at myself while buying more reasonably priced food.
I remain stagflationary long-term, but the data is leaning much more towards the stagnant growth part of the story and not so much the inflation part of the story. As a saver, I'm fine with that.
Each year I brace for the inflationary financial pain to hit my conservative treasury inflation protected securities (TIPS). It never seems to come. I'm fine with that too.
January 29, 2009
*****World Food Prices Are Rising Fast*****
Rising worldwide food inflation is surprising and puzzling economists. They don’t understand why it is happening (they didn’t see the credit crisis or the bursting commodity bubble coming either). Next month, as food inflation continues to grow worse and consumers around the world start stockpiling food, these economists will really start to worry, and, in about two months time, with food inflation truly spiraling out of control, they start panicking, their deflation predictions completely forgotten.
It is one year later. So where is the inflationary death spiral? I was at Costco the other day. The dry spaghetti I like is now cheaper than it was when I first began to hoard it a few years ago. They even had someone offering free samples with the Prego sauce I also like. In my opinion, food prices in general are not "spiraling out of control" in America.
I cannot say what the future will bring, but there's a decent chance that we're getting more hysteria than actual inflation, at least so far.
Source Data:
St Louis Fed: CPI-U: Food
20 comments:
Mark,
good stuff and right on point in the time frame. Inflation is a slow killer though; I am a diet coke addict and a 20 ounce bottle was 69 cents WAY back in 2000. It's $1.69 now. Last year it was $1.59. Inflation? Yes, then no. It all depends.
I think wage pressures will keep reported inflation low for some time.
GYSC,
My "recession-o-meter" uses the measure of "2 for" when applied to 12-packs of Pepsi.
During the dot-com bust recession gas stations in my area dropped to $5.00 for 2 12-packs of Pepsi. Today same gas stations are currently at 2 for $5.50. Not bad. I fully expect to see 2/$5.00 sometime before this depression is over. If it ever is.
What I have not been able to determine is whether or not Pepsi goes better with Johnnie Walker when it's priced at 2/5 or 2/5.50. Maybe some additional research is in order...now this could take awhile...
GYSC & G.H.,
Here's my soda inflation gauge. Funny how we all remember the price of soda! There's something about sugary water I guess, lol.
In the early 1990s, I remember thinking I got a great deal on name brand soda if I could buy a 6-pack on sale for a dollar. The price sticks in my head because it was such a round number.
As recently as 2004, I was able to buy 5 12-packs on sale for $10.
Concerning inflation, that's at least 10 years of nothing. It was the same price.
As oil rose, it cost me, $11, $12, $13, and then $14.
I recently got 4 12-packs for $10. That's not too bad compared to 2004 prices. It has been about 5 1/2 years. It's a 4% per year rate, which isn't THAT bad considering what sugary water is fairly close to the "fuel" chain, and that it followed 10 years of nothing.
Of course, this only applies to sale prices though.
I think I see the issue here, you guess are bulk buyers! Bulk is always cheap because smart people buy in bulk. I am not smart now and was totally stupid back then (I feel I have improved)!
GH,
wow Johhnie Walker! I go for the top of the line drink, Budweiser! As far as I am concerned any price is fine!
GYSC,
"Bulk is always cheap because smart people buy in bulk."
Ever play dungeons and dragons? There is intelligence and then there is wisdom. Two different stats! It takes wisdom to buy in bulk. No intelligence needed. Good God I'm nerdy, lol.
You don't have to buy 4 12-packs for $10. You can just buy one 12-pack for $2.50. Okay, okay. That's still bulk. I admit it.
However, that said, I do think "wise" people realize that when the grocery store limits you to X amount of items at Y price, it is probably in your best interest to buy all X of them.
I have faith in you GYSC! You are smart. You just need to fight your non-wise impulse buyer gene! We all have it. Control it. Star Wars you must watch before grocery store entering you must do.
Grocery store pricing is fascinating to me. They play two games.
One game is for the person who does not care about price. The other is for those who do care about price.
Take Hamburger/Tuna Helper. I can't remember ever paying more than $1 a box. The sales are fairly constant. The product keeps a long time. When it is on sale, I stock up.
However, if I wanted to, the stores would let me pay about $2.50. They would not want to deny me the joy of paying a premium for what is clearly a premium product. Okay, okay, it is not necessarily a premium product. In fact, my widsom probably comes into question every time I eat it, lol. It's a comfort food though.
Mark,
cans do not fit into car cup holders well so I went with the bottles until.......
I discovered the Exxon Big Gulp! 32 ounces of diet coke fountain soda style! Today I do the cumberland farms equivalent (I used to work at one in college).
I do not scrimp on food, after eating 2 times a week (mon and fri) for the last year in college I go all out, but I can still only eat 2 times a day even now! Stomach shrinkage I guess.
GYSC,
The Exxon Big Gulp?
I'm picturing the spill and its aftermath, lol.
You certainly had hard times in college. I can't even imagine going that hungry.
In a related story...
http://www.youtube.com/watch?v=3bObItmxAGc
I am a horrible person and will now be going directly to hell when I die. I hope the laugh I had was worth it. Sigh.
Stag,
"It takes wisdom to buy in bulk."
Is this the impetus that led shrewd marketers to invent the "...the more you buy the more you save..." paradigm?
"Star Wars you must watch before grocery store entering you must do."
I was taught that you must never go to the grocery hungry.
A "wise" grocery shopper must be well versed in the concept of "loss leaders". This is the key to beating the grocery at their own game.
G.H.,
I was taught that you must never go to the grocery hungry.
That is an excellent one. I would add "thirsty" to that as well. Thirst is a powerful motivator when in the cold beverage section of a grocery store.
If I am going to be out for a long time during the day, I often put snacks and a can or two of soda in a cooler in my trunk, especially if my girlfriend tags along. I don't do convenience stores. The trunk is actually much more convenient to me.
A "wise" grocery shopper must be well versed in the concept of "loss leaders". This is the key to beating the grocery at their own game.
I'm a big believer in shopping lists based on weekly grocery flyer sales. As you say, dwell on the "loss leaders".
I'm generally in and out. I do a quick check through the aisles for unadvertised sales, but if it isn't on the list then I rarely even look at it.
I don't think people realize just how much money they can save doing that.
Here's a receipt taken at random (1/18/10).
* 8 cans of Progresso Split Pea soup.
* 2 packages of Oreo cookies. (unadvertised special)
* 10 pound bag of potatoes.
I spent $14.87. I saved $17.22.
40-60% off is fairly common. I didn't even need a coupon.
That's not representative of how I eat by the way. Vegetables I tend to buy frozen at Costco. Meats tend to come all at once in big "loss leader" purchases. I like London Broil. I tend to buy 10+ pounds at a time. I've got a food saver system and as advertised it can actually keep the meat quite tasty for several YEARS if kept frozen. Hard to believe I know, but the vacuum does indeed stop all freezer burn.
http://www.foodsaver.com/FoodStorage.aspx?id=fsb
Three of the products - beef steak, ground beef, and chicken - were still rated as acceptable after 5 years of storage at 0°Fahrenheit!
2 years is about as long as I would go, but to be honest, I really couldn't see any loss of quality. The sealing bags are not cheap but you more than make up the price if you buy the meat cheap enough though. I figure it costs about 30 cents a pound to store it this way.
Hot dogs I buy in bulk at Costco and then store in my own smaller ziplock bags in the freezer (ziplock is cheaper than foodsaver for things that don't need it), so I can thaw out a half dozen or so at a time.
Stag,
"I don't do convenience stores."
Amen brother.
"I'm generally in and out."
Even though you used "generally" this statement is in direct conflict with you're previously stated "especially if my girlfriend tags along."
Alright, I'm completely joking, and mistaking the order of statements, but as long as your girlfriend doesn't read this blog I thought it was funny anyway. And even if she does read this I hope she accepts my wink/wink/nod/nod.
"I've got a food saver system and as advertised it can actually keep the meat quite tasty for several YEARS if kept frozen. Hard to believe I know, but the vacuum does indeed stop all freezer burn."
You're preaching to the choir here.
I have an embedded conspiracy theory that beef cows give different tasting beef in the Summer vs. the Winter. So I love to "stock up" during the Summer and I've taught myself the finer points of freezing beef (if someone comes in here and tells me I'm whacked about the Sum/Win thing I won't argue! ;-)
G.H.,
I think my ex-wife would laugh hardest at your joke at my expense.
Oops. That's not quite right.
I think my ex-wife at my expense would laugh hardest at your joke.
Oops. I better get the hardest out too.
Oops. When I said "hardest out" I meant out of the sentence of course. Not out of...
Damn. This is hard.
Oops. I just did it again. Nothing is hard. I'm just typing. Conversing. That's all.
Oops. When I say I did it again, I meant that I left myself open for another pun attack, not something else.
Oops. I left myself open figuratively.
I think I better stop while I'm behind.
Oops. Behind was probably the wrong word.
Stag,
I'll remember that.
I think.
Anyone remember the great rice panic of 2008?
-jus me
jus me,
Anyone remember the great rice panic of 2008?
It was the first time my "hoard" was tested in true battle conditions. My "Maginot Line" of rice supplies were found nearly lacking, lol.
You can see it in the chart, if you look close.
The seasonally adjusted food index went from 206.767 in December 2007 to 219.147 in January 2009. That's a 6% increase.
As of January 2010, it now sits at just 218.339 though.
That said, if oil continues to go up as faster or faster than the stock market, then rice should too at some point, again. Sigh.
By the way, great trend lines!!
- jus me
jus me,
I aspire to be the Trend Line Master! :)
http://illusionofprosperity.blogspot.com/2007/08/life-of-day-trader.html
It would be sweet if they had like this game called Trend Line Master. Everyone logged in and then they tried to draw trend lines on these charts and um, you competed with other people and whoever drew the best trend lines was like the Trend Line Master.
That 2007 video seems to only crack me up, but I love every opportunity to share it. The last part is just as good.
So I've been loading up on these Chinese stocks the last few days. Those Chinese stocks, man, that's one thing that never goes down. Chinese stocks.
Yeah, I think I'm going to get a Chinese nanny, but just because, you know, I don't have kids yet but I want to reserve one. So, if I do have kids in the future I just want to make sure that I have a Chinese nanny. Yeah, I know a lot of people are getting Chinese nannies so that children can grow up and communicate with business in China but I just think it would be better for their kung fu.
Hahaha!!! I just love that video. It deserves more than 1000 views. It's genius.
In hindsight, the timing was especially good too. His sense of humor and sarcasm was well ahead of the game.
Those Chinese stocks do indeed only go up, lol.
http://finance.yahoo.com/q/bc?s=000001.SS&t=my
"when the grocery store limits you to X amount of items at Y price, it is probably in your best interest to buy all X of them"
Yes, probably.
A friend of mine once managed a Long's drug store.
If, say, cleanser was normally priced $1.19, and they had too much, he'd put it on an endcap, with hand lettered sign "Special Price! $1.19! Wow!"
It would fly off the shelves.
If he added the magic words "Limit 3 per customer," guess how many people would put in their carts?
-jus me
BTW, I like that 2007 video, also. Thanks for the link.
-jus me
My friend the ex-manager also said it worked if he raised the price
(Special price! $1.29! Wow!)
but said he only did it once to see what would happen, concerned about liability or reputation or something (maybe his conscience), I don't recall...
-jus me
jus me,
Funny! Yes. I'm also reminded of the informercials that put a "strict limit of X" on their ad. It's most often seen when buying nearly worthless gold plated coin replicas, lol.
Point taken! In my defense, I did use the word "probably". There are clearly no sure things! :)
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