Debate Over Food Inflation: What's the Real Story?

Is food a bargain or are prices rising far faster than the BLS says they are?

The above image is from the Visual Capitalist via ZeroHedge a Decade of Grocery Prices for 30 Common Items.

Is the chart accurate? I have no reason to believe otherwise.

In fact, it supports my contention that food is a bargain.

Annualized Rate of Inflation

16 of 30 Items Annualized Inflation Under 2%

16 of the 30 items listed by the Visual Capitalist have prices rising less than 2% per year.

Foods that Store Easily

Next consider flour, rice, sugar, pasta, and dried beans.

All of those items store very well for long periods of time in a pantry. No refrigeration is necessary.

Moreover, all of those items go on sale periodically. There is no reason to buy any of those items when not on sale.

And how much flour and sugar does one use anyway? Few bake bread any more, and those who do can always buy on sale.

Pasta is frequently 2 for 1.

There are 5 items in this category.

Meat

I have discussed this before and it's worth repeating. Get a freezer!

I was at Sam's Club a week ago. Whole pork tenderloin was on sale at $1.98 a pound. It is still on sale today at that price.

Compare that price to the Visual Capitalist listed price of $3.82.

All of the prices listed by the Visual Capitalist are likely accurate, but as of a moment in time.

Anyone paying those prices has no idea how to shop.

Paying $4.12 per pound for ground beef or $3.21 for boneless chicken is absurd.

Frozen turkeys go on sale every Thanksgiving for $0.69 or so. That's the same freaking price nearly every year for 10 years. Buy 2 or 3. Have one for thanksgiving and another for Christmas and Easter.

Bacon, on sale, is often 2 for 1.

There are 7 items in the meat basket. One of them, pork, also falls in the under 2% inflation category.

Peanut Butter

Peanut butter does not store forever, but it does store well, especially unopened, and is frequently on sale.

Food Inflation Complaints

  • Grapes at 2.48% inflation.
  • Potatoes at 3.31% inflation.
  • Cookies at 2.54% inflation.

Those are items that do not store well and may not go on sale frequently enough to take advantage.

Summation

  • 16 out of 30 items in the basket have inflation under 2%
  • 5 items out of 30 have frequent sales and store well at room temperature for long periods of time.
  • Peanut butter stores long enough at room temperatures to last from sale to sale.
  • 7 meat items, one of them also in the low-inflation category, are a bargain for anyone smart enough to get a freezer.

Sales prices, I have pointed out before, are quite stable, even if non-sale prices aren't.

People look at the lead-in chart and think "Oh my God, flour is up 44%". They have no idea how to annualize price increases and they also forget about all the times things are on sale.

Ironically, the Visual Capitalist makes a compelling case that matches my point of view: food is a bargain. All you need to do is learn how to shop.

Discussion Items

It's important to note that I do not agree with the Fed's inflation policies.

I am merely stating that the reported amount of food inflation is total nonsense for anyone who knows how to shop.

Moreover, If we got rid of tariffs, sugar subsidies, etc., many prices in that food basket would be declining.

I support free trade and believe prices should be lower, but let's not overstate how much food prices are rising.

Mike "Mish" Shedlock

Comments
No. 1-25
Mike Mish Shedlock
Mike Mish Shedlock

Editor

Food away from home: We eat out a lot and at the same restaurants. Prices have not changed where we frequent. But prices at fast food places seem to have gone through the roof. It's insane what it costs for 2 people at Wendy's. On the road, we now often go to grocery stores and build our own sandwiches or salads getting far better food and value than fast food places.

Mike Mish Shedlock
Mike Mish Shedlock

Editor

My post got wiped out - Hoping to recover

nic9075
nic9075

Food at home was up .8% in the recent year, while food away from home was up 2.4%. As Mish commented, not many people bake their own bread anymore (Actually, I do, sometimes.)

LOL . Food 'away from home' up only 2.4%?? LOL.. More like up 10% across the board. The thing is that people (especially millenials) are willing to pay these higher prices that restaurants (from low end fast food to high end dining are charging) so the higher minimum wages & $15 per hour isn't causing job losses that some feared. Actually it is the opposite, new restaurants are opening everywhere now it seems

nic9075
nic9075

Millenials dont shop for groceries and don't cook. They pay $15.95 for a grilled chicken sandwich or $9.00 for a Chipolte Burrito bowl.

Stuki
Stuki

They really need to include fish in that comparison. Fresh and wild caught.

Claiming the fact that it is possible to get some item cheaper than what this, presumably (or at least one could hope) like for like, comparison indicates; by “shopping smart;” makes no more sense than claiming drug prices aren’t really rising, since one could always get them cheaper in the Philippines.