How inflation is eating away at family food budgets
The grocery store cash register is doubling as a vacuum.
By Jeff Reeves, InvestorPlace.com
Inflation is the untold story of the economic downturn. While unemployment, foreclosures and government debt make plenty of headlines, it's startling to consider the slow and steady ascent of consumer staples. Inflation is driving up things like beef, soft drinks, grains and milk.
There are ways to hedge your investment portfolio against inflation, such as the best inflation investments I highlighted recently in a separate column. But there is little you can do to cut back the grocery bill as food prices continue rising.
Haven't noticed how bad inflation has gotten at the supermarket? Well, here are nine ugly instances showing how much damage inflation is inflicting on family budgets:
1. The U.S. Labor Department reported recently that consumer prices were up 0.4% in August. That's a 3.8% rate for the full year and the hottest pace of inflation since November 2008.
3. In New York City, ground chuck prices are up 18% this year to $3.99 a pound, according to the New York Post. As a result, "the price of the lowly hamburger is expected to surge by as much as 32 percent over the next several months." Think things are better outside Manhattan? Nationwide, the USDA estimates beef prices will be up 8% to 9% in 2011.
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4. Lest you think beef is alone, pork prices also are inflating briskly -- 7.5% above levels seen last August. The phenomenon actually has pushed up pork prices so much so that pig theft is more common in the Midwest. Watch out, Wilbur.
5. The USDA also raised its inflation forecast for eggs recently, from 5% to 6% this year. Not a good sign, considering eggs are one of the most affordable sources of protein in the supermarket.
6. Solae, a joint venture between chemical powerhouse DuPont (DD) and agribusiness giant Bunge (BG), develops soy-based foods and nutrition products. Inflation in soy prices has resulted in an 8% price hike for Solae's products, ranging from snacks to supplements to infant formula. It's the second time Solae has raised prices this year. The company has tried to spin it by citing "extraordinary global demand"and saying soy prices aren't rising as fast as beef prices, but that's not much of a consolation to shoppers, even if it is clever marketing.
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7. Coca-Cola (KO) has made a shrewd move this month, announcing it will sell a 12.5-ounce bottle of Coke for 89 cents. That product launch, under the guise of smaller portion sizes, allows Coca-Cola to raise the price on its 16-ounce bottle to about $1.19 over the next few months and prop up profit margins.
8. Despite the fact that milk output in August was up more than 2% from a year ago, the USDA reports that this year's average milk price is expected to set a record $20.40 per hundredweight -- up more than $4 from last year for a roughly 25% jump in milk prices.
9. In 2011, the USDA projects the price index for all food will increase 3% to 4%. That breaks down with "Food-at-home (grocery store) prices are forecast to rise 3.5% to 4.5%, while food-away-from-home (restaurant) prices are forecast to increase 3% to 4%."
On top of that, 2012 projections are for another food-at-home price increase of 3% to 4%.
Jeff Reeves is the editor of InvestorPlace.com. As of this writing, he owned none of the aforementioned stocks. Write him at email@example.com, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook.
If we used the same method to calculate inflation now as we did in 1980 it would be close to 9%.
The reason the government doesn’t recognize today’s inflation is because they skewed the numbers using pseudo-science when the implemented the recommendations of the Boskin Commission.
This was their way of cutting Social Security. They manipulated the inflation numbers to keep CPI increases far lower than they should be. As a result Social Security checks today are half what they would be if we used the same method to calculate inflation as we had in 1980.
We know big banks have been driving up the price of gas by manipulating the commodities market. Wonder if they have been doing the same with other essentials like food? These lowlife pigs will do anything and our government will do nothing to stop them.
Goldman Sachs and others have done more harm to America than all terrorist combined. We need to surround them with protesters. Force them to bring out machine guns then ,maybe some will recognize what these lowlife scum really are.
God bless the young protesters in NY. Hopefully, they will be the start of something big. Ten or twenty million in the streets with good leadership and specific demands may be our only hope. We need to support and defend these young people every way possible.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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