You’re Not Imagining Food Inflation By Jim Geraghty
https://www.nationalreview.com/the-morning-jolt/youre-not-imagining-food-inflation/
On the menu today: A new report in the Wall Street Journal confirms what you likely suspected — despite the Consumer Price Index numbers (CPI) getting much closer to normal, you’re still paying more to eat, whether you’re shopping at the grocery store or going out to a restaurant. In fact, Americans haven’t spent this much of their money on food since the early 1990s — a fact that is likely to widen the divide between the administration’s happy talk about the economy and Americans’ perceptions that they’re constantly being squeezed, even if they’re making more money than a few years ago. Meanwhile, to fight the rising cost of living, states are hiking the minimum wage, left and right. Hey, it’s not like that increased cost of labor could ever get passed along to consumers, right?
The ‘Shrinkflation’ Election
Have you had this experience? You read that the year-to-year numbers of the CPI indicate that inflation is largely, if not completely, beaten . . . and then you go to Trader Joe’s or your local grocery store, or you take the family out to eat, and when the bill comes you think someone has mistaken you for a much wealthier person. Did I accidentally get charged for a Lamborghini in there somewhere?
(This is where the typical Biden-defending lefty will jump in and say, “This is because you’re shopping at expensive stores and restaurants!” For what it’s worth, Trader Joe’s is less expensive than the average grocery store*. And if you want to argue that by living in northern Virginia, I’m buying food in a part of the country with a higher cost of living, fine, but the point is not that things are expensive compared to other places, it’s that things are expensive in this place compared to prices in the not-so-distant past in this place. )
Over in the Wall Street Journal, Jesse Newman and Heather Haddon lay out the numbers demonstrating that we’re not just imagining this. Americans are spending the biggest share of their income on food since 1991:
The last time Americans spent this much of their money on food, George H.W. Bush was in office, “Terminator 2: Judgment Day” was in theaters and C+C Music Factory was rocking the Billboard charts.
Eating continues to cost more, even as overall inflation has eased from the blistering pace consumers endured throughout much of 2022 and 2023. Prices at restaurants and other eateries were up 5.1 percent last month compared with January 2023, while grocery costs increased 1.2 percent during the same period, Labor Department data show.
Relief isn’t likely to arrive soon. Restaurant and food company executives said they are still grappling with rising labor costs and some ingredients, like cocoa, that are only getting more expensive. Consumers, they said, will find ways to cope.
“If you look historically after periods of inflation, there’s really no period you could point to where [food] prices go back down,” said Steve Cahillane, chief executive of snack giant Kellanova, in an interview. “They tend to be sticky.”
In 1991, U.S. consumers spent 11.4 percent of their disposable personal income on food, according to data from the U.S. Department of Agriculture. At the time, households were still dealing with steep food-price increases following an inflationary period during the 1970s.
More than three decades later, food spending has reattained that level, USDA data shows. In 2022, consumers spent 11.3 percent of their disposable income on food, according to the most recent USDA data available.
If you need to eat . . . is it really disposable income?
I would remind you, prices for food (both groceries and dining out) jumped around the middle of 2021 — they were 5.3 percent higher in October 2021 than in October 2020 and 11.4 percent higher in August 2022 than in August 2021. By July 2023, they were back down to 5 percent higher than in July 2022. Yes, in January 2024 they were “only” 2.6 percent higher than in January 2023, but by now we’ve endured a long, long stretch of rising prices everywhere from the supermarket to the street-corner hot-dog stand to the fast-food place to the nice restaurant.
Jared Bernstein, the chair of the White House Council of Economic Advisers and a top adviser to President Joe Biden, said on CNN, yesterday:
I’m not worried about that. When it comes to inflation, the trend is our friend. The trend is the underlying momentum of an economic indicator, and that trend has been quite supportive and consistent in terms of easing prices.
How? How does the Biden team look at the economy, gloss over the costs of both groceries and eating out, and conclude, “The trend is our friend”?
Poll after poll indicates that Americans say inflation is one of their top economic concerns, if not the top concern. Democrats and Biden fans ask, “How can that be when the CPI is much lower than it was a year ago?” But most people don’t develop their perceptions about inflation based upon what the U.S. Bureau of Labor Statistics says, they develop their perceptions based upon what they’re paying for their regular purchases — groceries, gas, monthly bills, and the rent or a mortgage.
The White House’s idea of good messaging on this is to put Joe Biden in the White House theater, put Doritos, Oreos, Gatorade, and cartons of ice cream next to him, and have him deliver an Andy Rooney-esque complaint complaint about “shrinkflation” — paying the same price for a package of snacks but finding less product inside.
As our Dominic Pino noted, “The video shows an image of products including Gatorade and Doritos, both of which have undergone shrinkflation in recent years. But the changes in their amounts were made in 2022, when inflation was much higher than it is today.”
And this is the same old Biden conspiracy theory that companies went on a price-gouging spree coincidentally around the same time that he and congressional Democrats dumped trillions of dollars of new spending into an economy that was already recovering from the Covid pandemic. Too much money, chasing too few goods and services, results in prices going up.
As Dominic writes, “Some companies redesigned their packaging to reduce the quantity of their products and cut costs. That’s what we should expect them to do in response to poor government policy that spurred inflation. For the president to now attack them for doing that, years after the fact, is bizarre.”
As luck would have it, Newman and Haddon specifically addressed the cost of Oreos:
Oreo maker Mondelez said in January it would continue raising prices on some of its products this year, largely because of cocoa prices, which earlier in February surged past a 46-year record. Hershey said this month it expects more expensive cocoa to cut into the company’s profit this year. Kraft Heinz said inflation is moderating but that its costs are still higher, driven in part by pricier tomatoes and sugar.
Cocoa prices are skyrocketing because of bad weather in West Africa, where a majority of the world’s cocoa beans are grown.
The Wall Street Journal also notes, “Companies are set to pay more for staffing, after 22 states in January lifted the minimum wage for hourly workers.”
In New York and Maryland, the minimum wage is now $15 per hour. In New Jersey, it is $15.13, in Connecticut it is $15.69, and in Washington state it is $16.28 per hour. Most state legislatures chose to raise the minimum wage as a response to inflation and the rising cost of living. Apparently, it never crossed anyone’s mind that mandating higher wages could increase the prices of goods and services, raising the cost of living even more.
Everyone wants — and arguably deserves — a raise to keep up with the rate of inflation; it’s not as if the labor they do has become less valuable. Recently, I was talking to a friend frustrated with her work, in part because she hadn’t gotten a raise in several years. I noted that with the rate of inflation, she had effectively taken a sizable pay cut — the value of her work had remained the same or likely increased (most workers get better and more efficient at what they do over time) while the purchasing power of her paycheck had shrunk. Alas, it appears her employer is convinced that she should provide 2024 value for a 2019 paycheck.
Biden likes to brag that if you’re making more now than before the pandemic, “That’s Bidenomics.” If you’re one of the folks making more now than you were before the pandemic, ask yourself — did that raise just appear one day because of some Biden administration policy? Or did you get that raise because you worked your butt off and earned it?
Why is this doddering old man trying to convince you that he should get credit for something you did? And why is it that when something goes wrong in the economy, he insists it’s everybody’s fault except his?
ADDENDUM: *When the topic turns to Trader Joe’s, my wife and I like to act out a little play for our friends.
Trader Joe: It is I, Trader Joe, with a spectacular new product! Try these new double-fried potato puffs!
My wife: Mmm, I always love your samples! This is great!
Trader Joe: Do you like it?
My wife: Yes!
Trader Joe: Do you really like it?
My wife: Yes, I’ll take two packages!
Trader Joe: Sorry, it just sold out, and we’ve discontinued the product! We’re never making any more! You will never see it again!
Like the Holderness Family, I really like Trader Joe’s, which does not mean I don’t notice the chain’s oddities and quirks.
And there’s a reason a pivotal scene in Gathering Five Storms takes place in a Trader Joe’s parking lot.
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