There were already big time inflationary pressures building before the coronavirus and related supply chain disruptions…
(by Half Dollar) Food price inflation should come as no surprise to anybody.
You know how the coronavirus was only the pin that pricked the bubble that was blown out of underlying financial system problems?
Yeah, it’s kind of like that with the coronavirus and this rapid food price inflation.
You see, we’ve been discussing food price inflation as a major concern for the better part of a year as, season after season, all around the globe, we began to see big problems with big agriculture.
Here’s just a small sampling of the problems with food production, pre-coronavirus:
- Historic flooding last Spring across large parts the US, and that flooding involved the loss of a million calves in Nebraska alone.
- In Asia in general and in China devastatingly, there was what was commonly reported on as “pig Ebola”, where millions of pigs either died of the disease (also called “African Swine Fever”) or were euthanized.
- Shifting back to the US in the Fall of 2019, who could forget the extreme cold that was wreaking havoc on the fall harvest season?
- Or how about last winter, when we reported on locust plagues of Biblical proportions devastating crops in the Middle East and Africa?
The point being there were already a gazillion signs pointing to rapid food price inflation, and, more importantly, food supply disruptions.
Which brings us to the just released Consumer Price Index, and the accompanying food charts are quite impressive.
Food is acknowledge from the get-go:
Does anybody really feel they’re spending less for stuff?
And at this point, without travelling, commuting, or whatever, who’s actually enjoying low gasoline and diesel prices?
I mean, if a person’s burned 3 gallons of gasoline over the past two months, then who the heck cares how much money he or she could be saving at the pump if he or she is jobless and now spending more money on food?
Of note is the “home index” of the food category since so many are people sheltering-in-place, staying-home, bugging-in, or whatever you want to call it:
The food at home index increased 4.1 percent over the last 12 months. All six
major grocery store food group indexes rose over the last year, with increases
ranging from 0.4 percent (fruits and vegetables) to 6.8 percent (meats, poultry,
fish, and eggs). The index for dairy and related products rose 5.2 percent, and
the index for nonalcoholic beverages increased 5.0 percent. The index for food
away from home rose 2.8 percent over the last year. The index for limited service
meals increased 3.2 percent and the index for full service meals rose 2.4 percent
over the last 12 months.
Indeed, to anybody who buys food, this is all too real:
And to think: If you believe the US government understates price inflation as official policy, through myriad cheap parlor tricks, which is an article for another day, then it’s even worse than the charts demonstrate.
Furthermore, that’s if food can be found, which is another issue altogether.
Anybody had luck finding yeast?
Or chicken breast?
But I digress.
Even food away from home, as reported by the BLS, is over 2.0%:
And Food price inflation is something that bites into the bottom 90% much more than the top 10% because the bottom 90% pay a significantly higher percentage of their income to food, that is, if they even have any income right now.
Speaking of income and food prices, what would it mean if the nation is broke and feeling the pain of six months of rapid food price inflation going into the 2020 election this November?
Regardless, last week, Charles Hugh Smith and I had a great discussion about inflation, employment, recovery on Main Street, and so much more:
Editor’s Note: President Nixon ordered a “freeze on all prices and wages throughout the United States” on that same dreadful August day in 1971:
Nixon did that when the CPI was 4.0%, and while the headline CPI has plunged here in 2020, President Trump has shown he has no problems nationalizing the nation’s food supply, as he did last month, so it is likely Trump would have no problems putting on the price controls when prices spiral out of control.
Curiously, the last time this was tried was in Venezuela.
And some would say that didn’t turn out too well.