Squeezed By The Staples!!!

HELP HELP, the food costs are rising!! It’s ok though, because wages are also rising to offset… no wait, oh crap, only food and fuel costs are rising, everything else is unresponsive! Good thing these facts are kept under control with our exceptional MBA degrees that will undoubtedly land us successful high paying jobs no matter what the economy has to say about it right, right.

This little peach of an informative helps shed some light on our current inflationary saga. Interestingly enough the article begins by stating that the even Wal8Mart’s “Always Low Prices” aren’t so low these days and that around the world we are seeing food-related riots. That’s right, I am not just talking about the common food fight, these bad boys are riots! “Nearly every food staple has seen a double-digit percentage increase over the past year, including a 38% hike for a dozen eggs, to $2.16, and a 19% jump, to $1.78, for a loaf of white bread, according to American Farm Bureau data.” Basically the average American has turned into a coupon hunter. I don’t know about you, but it looks and is starting to feel like we have been thrown into a painful circle of, dare I say it, recession-linked inflation. Unfortunately for the consumer, all of the goods that are seeing price increases are staples, with little if any elasticity and discretionary spending. We need food, we need gas. Apparently we also need a big fat kick in the pants, or at least our pocketbook


Emma said...

It amazes me that prices are still on the rise. I used to always hear my parents talk about the past when prices were so low. I am only twenty four years old and I can complain about the same thing my parents used to complain about: When will the increase in prices stop? A recession may just be good for the U.S. because it might put some control on the crazy prices. The economy is hurting, jobs are being lost, and wages are decreasing. Why are the prices still rising? There needs to be some quick planning that will turn the economy around.

Austin said...

Unfortunately the rising food prices are not all due to simple inflation. While this has some effect, there is also a supply issue. Worldwide there are food shortages due to political, economic, and environmental factors. This author made an interesting statement though, "we have to buy gas, we have to buy food...". These are essentially true, but the question we may all have to answer is whether we have to buy these things in the same way or not. To clarify, we can (and may need) to change our lifestyle. We have become stupifyingly accustomed to having what we want, when we want it. Perhaps our reality has now changed; although all change might not be as drastic as it first appears. I read an article in the last couple of days about potatoes. The potato has been firmly entrenched as the third most important world food crop for quite some time, but it has not experienced the same rapid inflation in price that the cereal grains have. This fact, in addition to the multitude of varieties the potato comes in (more than just "Idaho", amazing)and the diversity of climates in which it can grow have already contributed to a surge in the popularity of the humble tuber. The promise is so real that the United Nations Food Bank (or something like that) has proclaimed this to be the Year of the Potato, officially. This availability of a substitute product may have some tempering effect on other staple markets....eventually.

Dr. Tufte said...

Most of this inflation in the U.S. can be attributed to 3 things: 1) currency depreciation, 2) more expensive oil, and 3) diversion of corn production into ethanol to get bigger subsidies than are available for plain agricultural production.

Funny how each of those already involves heavy government interference: 1) managed exchange rates, 2) 90% of the world's oil is controlled by the public rather than the private sector, and 3) politically popular ethanol subsidies.

As to food riots around the world, most of these are related to increases in government set price ceilings from one below-equilibrium level to another. Most of that is brought on by governments who can't bring in enough tax dollars to keep subsidizing food at the same level.

Scary ... but explainable.