Talk of a tame CPI report this month is entirely an energy mirage and easy year-over-year comparisons. Food is a particular case in point. 
CPI Food Facts
- For 31 of the last 32 months, the price of food at home has risen at least 0.3 percent.
- For 30 of the last 31 months, the price of food away from home has risen at least 0.3 percent.
- The average monthly increase over these periods is 0.6 percent for food at home and food away from home.
Year-Over-Year Statistical Mirage
Food at home is only up 2.1 percent vs a year ago. That is due to to easy year-over-year comparisons.
CPI Six Food Categories Year-Over-Year
If all you eat is dairy, you are in luck. The price vs a year ago has gone down.
CPI Food Index Levels Since 1970
Rather than media-reported headline numbers, that chart better depicts how it feels to the grocery shopper. Let’s hone in on that.
CPI Food Index Levels Since 2020
Price Change vs Two Years Ago
- Food at Home: 14.8
- Food Away from Home: 14.4
- Meat, Fish, Eggs: 8.4
- Dairy: 15.1
- Cereals: 20.7
- Fruits and Vegetables: 10.6
I am sure glad the price of dairy is falling and the price of food at home is only up 2.1 percent.
What About Rent?
A 2.5 percent decline in energy smoothed the CPI in October. But for the 27th straight month, the cost of rent rose at least 0.4 percent.
For discussion and details, please see CPI Unchanged Thanks to Decline in Energy, but Rent Jumps 0.5 Percent
Don’t worry about food and rent because the Fed’s “Super-Core Indexes” exclude food, energy, and rent. So does Paul Krugman. Krugman’s “super-super core” also excludes used cars.
Last month I reported Krugman Says “We Won the War on Inflation at Very Little Cost”
Phew, everything is OK. But this leads to the dilemma of the day:
Why Are Americans in Such a Rotten Mood?
For discussion, please see Why Are Americans in Such a Rotten Mood? Biden Blames the Media
I’m pleased to report that mood has nothing to do with food or rent. It’s all the Media’s fault. Please click on the above link if you haven’t already for a real hoot on why this is the media’s fault.
Rise in costs of vegetables, eggs, and sugar may be moderating. Bake them into a pie, and because of the cost of labor increases, the price is 50 percent greater than four years ago. Rents are rising because home maintenance costs are escalating. Most of the materials, required for home repair, have some degree of labor. Add the outlay for workmen, and rents are not going down any time soon. Unless the ridiculous price of homes fall.
And yet whenever every union/work group demands an increase, the immediate response from many people is that it won’t change the price of anything very much, if at all.
Everything comes down to labor costs. Once robots are deployed to do most of the work humans do, prices should plummet. There will be huge deflation with ever more automation.
“Everything comes down to labor costs”
In 1923 perhaps.
If “everything”, including rent, came down to labor costs, then rents would be at or about 1973 levels. “Labor cost,” meaning the cost paid to labor aka wages, have been practically stagnant ever since.
Post 1971, everything comes down redistribution. Away from labor. To armies of produce-nothing deadweight leeches. Who live not off of labor, but rather off of rent, asset-channel mediated Fed welfare, mandates, regulations etc.
Those are the only ones whom all money is now being redistributed to. Labor is getting less and less. All that redistribution is what is increasing costs, hence prices. “Labor” is not paid anymore now, than they were in ’73.
Isn’t dairy heavily subsidized? I know people who still have cheese
Here’s Why a New York City Lobster Roll (With Fries!) Costs $32
Eliza Shapiro
Nov. 14, 2023
link to nytimes.com
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I live in CA. I just go into stores and take whatever I want and walk out. Everybody does it here.
(1.006)^32 =22% price increase. My food costs doubled in the same period.
You must be eating twice as much food.
I’d say my food costs are half again what they were.
Anecdotes in general aren’t worth much, especially those based on perceptions rather than data. I looked at my food related items I bought on Amazon in 2020 versus the current prices and the overall basket is up about 8% in 3 years.
You are likely buying a lot of the items that have gone up 100%. A lot more processed and prepackaged food I’m guessing.
Or you also buy a lot of other non food stuff at the grocery store (toilet paper/paper towels, cleaning supplies, laundry supplies etc) that are much costlier there than buying at discount places like Walmart / Sams / Costco etc. I stopped buying anything but food at grocery stores and a lot of things like canned goods are better off bought at Walmart etc.
Each month was >=0.3% + >=0.3% meaning >=0.6%. Looking at the chart, food away from home was <=0.9 every month, while food at home was <=0.8% every month. So the inflation in food in the period was <=1.7% a month. ^32 gives a 71.5% increase.
If you are looking at 12 month changes in prices, you can’t have “easy year over year comparisons”. Makes no sense.
1.006^32=1.21 or 21% inflation in approximately 3 years (32 vs 36 months). That seems right.
What isn’t stated is that the inflation seems to be entirely related to processed foods. The more processed the food, the higher the inflation.
For example I can still get BOGO (buy one, get 1 free) 5 lb bag of potatoes for $5.99 (or roughly $3 each). That’s the same price as I was paying in 2020. I can also find ribeye steaks on special for 9.99 lb same as in 2020 and chicken hasn’t really changed in price and Turkeys are 99 cents/lb right now for Butterball etc.
But canned goods which is what I consider to be a minor processing has changed by quite a bit. For example I used to get a can of refried beans for 99 cents, now its 1.25 which is roughly in line with inflation of 21%.
Things that are heavily processed have changed by dramatically more. Bags of chips have doubled in price or more (used to be able to get store brand bags on sale at the rate of 10 for 10 bucks, now when they are on sale it’s 2 for 3 bucks so 50% more). Cereal has also gone up huge (or the box has shrunk to give illusion price is same), same with salted nuts, cookies, boxed of Kraft dinner, soft drinks etc.
Somehow the cost of processing (whether it’s labor or cost of running the machines themselves) has skyrocketed so the more processed a food product is, the more it’s gone up relative to inflation.
Yes, that is a good observation about inflation in the cost of processed/junk food.
I have also noticed that the price of broccoli, cauliflower and brussels sprouts have not budged at all in over three years.
I wonder why? LOL…
Potatoes I remember paying a dollar for a fifty pound bag of culls but I’m old as hell lol
Since May 2021 all six food categories rose vertically up, but in Sept 2023 they almost completed a rd trip to the bottom.
WTIC dropped to $64 in May 2023.
Inflation is rolling over, powell is through with several rate cuts coming in 2023. Risk on. Load the boat with “cheep” stocks.
That may very well be the case, but the Fed’s primary tool of tweaking the fed funds rate doesn’t have much or any influence over longer term interest rates. If the government continues spending like a drunken sailor and the world doesn’t want to buy our debt, longer term rates are going to continue to rise and that’s what many types of loans (car loans, mortgages) are based on. The Fed would have to do QE to fight that scenrio.
We would assume that even with the Biden PPP payments, companies today are increasing prices if only to get back even more of the money they lost during Covid. There are only ten major food processing companies left I think, so increasing prices when there is little competition anymore should surprise no one. Also 5% of food is the actual meat/crop, whereas 95% of the price of the food is overhead. Easily tweaked upward.
I don’t know. I bought a dozen eggs at Walmart today for $1.79. They were $5 a year ago. I blame opportunistic price gouging by quasi monopolistic corporations more than government policies under Trump or Biden. IMO
A year ago onions were $0.69 a pound, last weekend they were $1.49 / pound.
The $4 box of cereal is now $6.50.
On the other hand, potatoes had a bumper crop. Once that rattles through the distribution system you should see those prices come down. I grow my own so I’m no help tracking that price.
The apple crop is also better than usual at least locally.
That box of cereal is also probably smaller than it was a year ago as well.
Mish, do the figures presented in your post take shrink-flation into account? Is it even possible to accurately account for shrink-flation?
Everything is priced in weight even if you don’t realize it. Boxes of cereal have definitely shrunk. But if you look closely at the price tag on the aisles it will say something like 5.99 for the box or 67 cents Oz. It’s the 67 cents Oz that they can reliably measure.
That whole egg-flation situation was because of the avian flu and increasing regulation for cage-free chickens that caught egg producers off guard. It wasn’t inflation in the sense of currency devaluation.