Bush doesn't know about $4 gas. Maybe someone should tell him abous pizza and beer:

BTW, $4 for premium has been noted in some parts of Los Angeles as of February 29.

Msnbc has a story, Pizza and beer now cost an arm and a leg, which says (in part):

Sure sign economy is headed for trouble: Even cheap eats are hard to find

If you’re looking for a sure sign the U.S. economy is headed in the wrong direction, all you need to do is look at the skyrocketing price of “recession-proof” foods: pizza, hot dogs, bagels and beer.

For many Americans, the credit crunch and the mortgage mess have left their pocketbooks – and their cupboards – bare. These same consumers, many living paycheck to paycheck, have relied on these cheaper foods to keep their expenditures down. Not anymore.

• Pizza makers have seen their cheese costs soar this year from $1.30 a pound to $1.76 a pound. Even worse, the flour used to make the dough has gone from $3-$7 dollars a bushel to $25 a bushel in less than a year.
• Beer makers have been forced to raise their prices because of the skyrocketing price of hops – one of the principle ingredients. The price of hops has gone from about $4 a pound in September to $40 a pound. The price of barley, beer’s other main ingredient, has nearly doubled.

Overall, retail food prices rose 4 percent last year – the biggest jump in 17 years. The USDA officials predicted another 3 percent to 4 percent increase this year and continuing price hikes, faster than the pace of inflation going into 2010. And the price pinch has hit the lower-income shoppers hardest.

And there is this accompanying graphic:

Wheat (or flour) prices have nearly tripled in one year. That's amazing. And yet the Fed (in particular Bernanke) doesn't see inflation as a big problem. Yet.

As Paul Volker said (and others as well), inflation is hardest on the poor. And we see it right now, with "cheap eats" becoming less so.

The Fed's dismissal of food and energy prices when assessing inflation is, by now, ridiculous. The real inflation rate that most people experience is somewhere around 6% (if not more so). And here's the real problem: Wages and other benefits are not keeping up with that at all. There's your difference with the 1970's. Miserable as those years were due to inflation, at least wages and benefits tended to keep up. But that's not what we're experiencing now. What we're experiencing is a substantial loss in real income.


posted by Quiddity at 3/01/2008 07:13:00 AM