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Annual Core Inflation Drops to 0.6%, the Lowest Ever
The nation's struggle to prevent deflation is apparently only just beginning.
Did I mention that I'm still deflationary? Meanwhile, Market Ticker has opted to home in on egg inflation instead. Fascinating.
CPI: Where Are My Zero-Inflation Eggs?
The food index has risen 1.4 percent, with both the food at home index and food away from home index rising the same 1.4 percent.
If you believe that, I've got a bridge to sell you.
It never ends. Okay, I pretty much believe that. Where's my bridge? I am just not seeing the overall inflation in food prices that he sees.
Here's a glimpse of a few of the better sales this week at my local Albertsons.
* $0.27 per pound turkey
* $0.47 per 15.25 ounce can Green Giant vegetables
* $0.88 for 10 pounds of potatoes
* $2.50 for 1.5 quart Dreyer's Ice Cream
* $0.79 for 16 ounces of Barilla Pasta (if I buy 10)
Don't take my word for it though. Let's sum up a virtually eggless turkey dinner.
Cost of Classic Thanksgiving Dinner Up Slightly in 2010
AFBF’s 25th annual informal price survey of classic items found on the Thanksgiving Day dinner table indicates the average cost of this year’s feast for 10 is $43.47, a 56-cent price increase from last year’s average of $42.91. This year’s meal is actually $1.14 cheaper than what shoppers paid two years ago, when the total was $44.61.
That's a 1.3% increase over last year as seen in their informal price survey. From what I can see at the grocery store this year, that sounds about right to me.
The 1.3 percent increase in the national average cost reported this year by Farm Bureau for a classic Thanksgiving dinner tracks closely with the organization’s 2010 quarterly marketbasket food surveys and the federal government’s Consumer Price Index (available online at http://data.bls.gov/).
Indeed it does.
It's not Albertson's turkey at 27 cents per pound (the survey is not based on sale prices) that truly amazes me though. It's the spaghetti. A very, very long standing rule of mine is that if I am buying spaghetti for $1 per pound then I am getting a very good price. Today's price is just 79 cents.
Remember that spike in wheat prices we just had? Spaghetti is made of wheat. Right? So where is the inflation in spaghetti prices?
November 16, 2010
Wheat Falls Most in Three Months on Commodity Rout, Favorable U.S. Weather
Chinese Premier Wen Jiabao said today that the cabinet is drafting measures to counter rapid price gains. The nation may impose price limits on food and toughen punishment of those found speculating on agriculture futures, the China Securities Journal reported, citing an unidentified person.
Normally I am not a believer in price controls but perhaps they have a point. Here's a chart of long-term wheat prices courtesy of Index Mundi.
Click to enlarge.
The Fed is attempting to create the second wheat bubble in just the past four years and the Chinese don't seem to appreciate it all that much. It's almost like they've got a billion or more people to feed. Go figure.
12 comments:
China's Cabinet May Impose Temporary Price Controls to Counter Inflation
2008 Precedent
China in January 2008 temporarily froze prices for oil products, natural gas and electricity, as well as daily goods and school and transportation fees, to counter inflation that surged to the fastest pace in more than a decade. Shanghai’s stock index plunged in 2008 after peaking in October 2007.
“It’s feeling like the winter of 2007 all over again,” said Gavin Parry, managing director of Parry International Trading Ltd., a stock trading desk in Hong Kong. “The last time China enacted price controls, they ended the Shanghai bull market. The knock-on could be larger this time given the global focus on China.”
Shanghai’s benchmark index fell 1.9 percent today, after a 4 percent decline yesterday.
http://blogs.reuters.com/felix-salmon/2009/06/24/how-commodity-indices-broke-the-wheat-futures-market/
Stag,
I'm not sure you're properly comparing apples to oranges. If memory serves, food and energy aren't included in the CPI.
I think they were included at one point, but the Boskin Commission introduced hedonic adjustments to remove them.
I'm not eggsagerating here. ;)
Anonymous,
Fascinating article!
Here's a link to your link.
June 24, 2009
How commodity indices broke the wheat futures market
This very odd phenomenon — which caused farmers a lot of harm — has now been explained in a 247-page report from the Senate investigations subcommittee, entitled Excessive Speculation in the Wheat Market. The main PDF is here; there are exhibits and addenda here. The culprit, it turns out, is index traders.
Who needed a 247-page report. All it took was a viewing of...
Trading Places - Final Scene
mab,
You scream, I scream, we all scream for ice cream!
Pick a flavor that has eggs in it for extreme value.
Dreyer's French Vanilla
The ultimate in simple, pure indulgence with no added sugar. Extra creamy vanilla light ice cream, tiny vanilla beans and a rich, smooth flavor make this a truly elegant vanilla.
$2.50 a quart for all that AND it has egg yolks in it? Died and went to heaven I did. Indeed!
As a side note, I usually buy my eggs at Sam's Club. My last purchase was less than 8 cents per egg. On average, I probably eat about 1/2 of an egg per day. Perhaps eggs aren't "eggsactly" representative of my food budget nor are they representative of my overall budget.
As a side note...
All trademarks are owned by Société des Produits Nestlé S.A., Vevey, Switzerland.
Switzerland? That ice cream sure "acts" like money! It's packed with hard money commodity goodness! ;)
"Remember that spike in wheat prices we just had? Spaghetti is made of wheat. Right? So where is the inflation in spaghetti prices?"
Just wait 'til next year Charlie Brown. You'll see! The Great Pumpkin will appear and also you'll be paying $23.05 for a loaf of wheat bread...even at Albertson's!
Ok, ok, maybe not next year, but it's just around the corner, Glenn says so!
http://tinyurl.com/2e8ef6z
P.S. And yes, Glenn is still accepting paper currency and credit card orders for his books and T-shirts.
Gold is not necessary for a successful transaction.
One more side note since 3 is such a lucky number.
Dreyer's ice cream really does "act" like "stable" money.
During the inflationary period heading into the housing bust, the price of ice cream rose a bit.
During the deflationary period we're still in, the price of ice cream fell a bit.
What I'm really trying to say here is that we don't need to put our currency back on a gold standard. We need to keep it on a Rocky Road standard! ;)
watchtower,
Here's a link to your link.
Look out: high food prices on the way
GLENN: These again are coming from the National Inflation Association. A 64-ounce jug of orange juice, $45.71. And this one I found the most amazing. I had to look at this, and I actually had to look at the chocolate bar on the air and off the air because I could not believe this one would be true. For a Hershey's milk chocolate bar, 1.55 ounces, that's one regular chocolate bar, $15.50.
PAT: And when do they predict these prices are going to begin?
GLENN: They don't give --
PAT: There's no timetable?
GLENN: There's no timetable for the prices, but they are making a prediction for these prices to be, quote, around the corner.
STU: I mean, yeah. Obviously at some point -- I mean, right now you can buy a 36-pack of Hershey's milk chocolate bars for 25 bucks on Amazon, 36. I mean, I don't know if that's the lowest price out there but it's a pretty good price. But now they are saying one chocolate bar?
GLENN: One chocolate bar. One 1.55-ounce chocolate bar, Hershey's chocolate, $15.
STU: What, the year 2700?
Hahaha! Of course not. $15 candy bars are just around the corner. Chinese factory workers will work two full days just for the privilege!
Candy Bars, the BLS, and Shadowstats
I do not see any signs of a CPI conspiracy based on the price of candy bars.
Damn. I'll never be a popular radio show personality apparently. Sigh.
Look, I don't suppose you fully understand how painful it is for us residents of the European Union when you quote US food prices. I'll grant that our food may well be, by and large, better than yours, but dear God it's costly. And the extra cost has nothing to do with its quality, it's to do with politics. Don't even think of reporting your gasoline prices.
The year-on-year change in the full CPI-U is 1.2 percent. This is the basket people actually pay for, and a full year is enough time that the "volatile" food and energy should be included.
1.2% is supposedly within the Fed's comfort range and the most recent monthly move was 0.2% (even more within the Fed's comfort range), so I don't see anything to get excited about.
dearieme,
Sorry about that! You may get the last laugh though. We built homes assuming $1 gas. It's close to $4 now. That's 4x more. Oops!
If we had instead started with $3 gas and gone to $6, not only would we have built homes closer together but the increase's shock value would have only been half as much (2x instead of 4x). Heck, homes might have even been built within walking distance of stores and work!
scoremore,
Indeed!
I do think the core rate is worth looking at though. Commodities have risen to the point where they could crash again. Housing prices are also expected to turn south again. There are elevated deflationary risks.
That said, the view of inflation using the rear view mirror is tame. As you suggest, there is nothing to be alarmed about. To point to "eggs" as a sign that the CPI-U is a sham is ridiculous to me. One egg costs about 8 cents. It is a tiny portion of my expenses.
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