Saturday, March 22, 2008
Hidden inflation:Actually, hidden in plain sight. On Friday I go to the grocery store because I need a large jar of mayonnaise. The house brand is sold out, so I look to the left where there are plenty of jars of Best Foods mayo (this is on the west coast). But I notice that it's 30 ounces, which seemed "wrong". Close examination of the store-brand price label shows that the out-of-stock jar was 32 ounces - which was what I thought was the standard size for a large jar of mayonnaise. I get the Best Foods mayonnaise, and don't think more of it. Later that night on ABC's World News Tonight they have a short report that begins by noting that the size of Cadbury's Easter Egg has shrunk over the years. Then it's pointed out that Hellmann's mayonnaise (the east coast version of Best Foods) was reduced from 32 to 30 ounces! (So I was right to suspect something had changed.) Other items, like bar soap, have also shrunk in size - because the prices for the raw materials has jumped and companies are loath to raise prices, so they reduce the quantity instead. Today I visit a friend at a local cafe. I always get the large Coke, a 24 ounce cup, for $1.89 (tax included). But this time the cup is smaller, 16 ounces, and a refill is 50 cents. Another example of a shrunken product size. Observing such a change in two consecutive days (with a national news report to boot) certainly makes it look like something is going on. Is inflation gaining? Will these (in effect) price increases show up in the government CPI statistics?* Will the Fed dismiss them since food and energy isn't "core"? Will this inflation cause further distress for the typical consumer? * UPDATE: Barry Ritholtz has remarked about similar "hidden" realities: Many of the stated economic gains have been a false ghost. Whether it was overstated job creation (NFP), understated inflation (CPI) or "inflated" growth (GDP), a shocking amount of the debate about the economic expansion has been primarily spin.
posted by Quiddity at 3/22/2008 06:01:00 PM
7 comments
A "man in the street" panelist on Newshour this week said, "Everything you touch comes on a truck. Higher fuel prices mean higher prices for everything you buy."
I have yet to see a report on fuel prices that includes a graph of world oil production over the last few years. The figures I've seen show that world oil production peaked in 2005 or 2006, depending upon how and what is counted. We are, at the very least, in a world oil production plateau. We may have already reached the condition of Peak Oil. It would be good if we considered that possibility, I mean just in case.
While inflation is a real problem, reduced serving sizes could be a blessing for Americans.
I work with feral cats in a trap-neuter-release program and buy a lot of cat food in large sizes. The big bags of the national brands are now 16 pounds instead of 18, 7.5 down to 7, 3.5 down to three.
The dry food contains grain and grain prices are peaking because of the ethanol subsidies, among other things. This is a major hit for a non-profit in already tight times.
The store brands that didn't change size have increased the price from 15 to 20%. This is happening in every aisle, but this was the most notable because of the bulk purchasing on a regular schedule.
Rupert Murdoch said, "The greatest thing to come out of this [war] for the world economy...would be $20 a barrel for oil. That's bigger than any tax cut in any country."
By his own logic, and in addition to the inflation discussed in this post, hasn't this war increased our taxes to near crippling levels?
Here's another example. My local 7-11 has a shelf in the refrigerator case for pints of orange juice. The no pulp, the orange strawberry banana, the orange tangerine are all noticeably shorter than the "some pulp" version. They all were once 16 oz. Now most are 14 oz. and I'm sure when the "some pulp" sells out, it will shrink too.l
It's deja vu time! This is what the mid-to-late 70s were like and we haven't even come close to the stagflation of that period.
this is an expansion of the wallmart ever lower prices miracle. walking down the aisle at wallmart, prices always seem lower than at the grocery store, and they are. but many of the items are a few ounces less than the standard packaging. and, if you've been at at "dollar" store lately, you know that many prices are now $1.49 or higher. the heyday of sedating the american comsumer with low cost shopping is grinding to a halt.
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