A couple subscribers have been pushing back on my take on inflation; essentially their position is that “real people” (as opposed to “fake people”?) are suffering from pocketbook issues, issues that I do not understand.
Well…lets – very briefly – dig into “pocketbook” issues.
First, here’s the latest Consumer Price Index figures from last month courtesy of the US Labor Department…this looks at price changes from December 2022.
But that’s just one year…looking further back, food prices have indeed increased a lot – almost 20%. – since 2019.
Some food producers claim inflation is the driver, forcing them to increase prices to keep up with inflation,
But there’s solid evidence many food companies are just jacking up your prices to jack up their profits.
This from NYT
- PepsiCo…prices for its drinks and chips were up 17 percent in the latest quarter … its third-quarter profit grew more than 20 percent.
- Coca-Cola reported profit up 14 percent from a year earlier, thanks in large part to price increases.
- Chipotle Mexican Grill’s prices are now nearly 15 percent higher than a year earlier, reported $257.1 million in profit… up nearly 26 percent…
From BonAppetit
- Kraft-Heinz reported a gross profit of more than $6.6 billion for the year, an increase of nearly 15% from the year before.
From TIME:
- Conagra Brands—one of the largest consumer packaged goods companies in the U.S.—announced that it had posted a nearly 60% year-over-year profit increase between December 2022 and February 2023. The Chicago-based company, which makes a long list of grocery staples including Chef Boyardee, Hunt’s, Slim Jim, Reddi-wip, and Marie Callender’s frozen meals, reported a net income of $342 million, up from $219 million in the same quarter a year prior.
- Tyson Foods, the largest meat company in the U.S., more than doubled its profits between the first quarters of 2021 and 2022.
- remember the huge price jump for eggs? According to TIME, “Cal-Maine Foods, the largest egg producer in the U.S., reported that its revenue doubled and profit surged 718% [in Q1 2023] because of higher egg prices.”
What does this mean for you?
If you’re going to point fingers, make sure you know who to point at.
Yup, and wages and employment have increased equal to or greater than core inflation.
Thanks for the note Keith.
Gotta hope folks will realize how much better off we are than pretty much every other country coming out of Covid.
Be well Joe
Per Milton Friedman:
“There is one and only one basic cause of inflation: too high a rate of growth in the quantity of money—too much money chasing the available supply of goods and services. That cause is produced in Washington, proximately, by the Federal Reserve System, which determines what happens to the quantity of money; ultimately, by the political and other pressures impinging on the System, of which the most important are the pressures to create money in order to pay for exploding Federal spending and in order to promote the goal of “full employment.” All other alleged causes of inflation—trade union intransigence, greedy business corporations, spend-thrift consumers, bad crops, harsh winters, OPEC [Organization of Petroleum Exporting Countries] cartels and so on—are either consequences of inflation, or excuses by Washington, or sources of temporary blips of inflation.”
Thanks for the note. To quote Jerome Powell, he who has led the rarest of all of economic accomplishments – the conquering of inflation without a recession:
“The connection between monetary aggregates and either growth or inflation was very strong for a long, long time, which ended about 40 years ago …. It was probably correct when it was written, but it’s been a different economy and a different financial system for some time.”