What Inflation?....

[Halbhh]

It you plant tomato seeds, you might get cheaper tomatoes than in a supermarket. Proclaiming, “What inflation?” is a bit extreme.

In 1970 a new house cost almost $23,400.
In 1979 a new house cost almost $58,500.

What was the inflation rate in the 1970’s?

Trivia - Cost of Living / 1970s Cost of Living

I'm relieved to finally figure out what is going on. You thought I was trying to make it seem there was little or no inflation (!?)....which is sorta the opposite of how I operate: I tend instead to emphasize what is real and can be quantified in numbers (so instead of minimizing inflation, I would emphasize it....)

Ok, I just edited the OP post to make it more clear what the OP Title wording "What Inflation..." is actually about. I think it will help prevent any further confusion about the aim of the OP post.

I added:

The title What Inflation... is taken from an interesting article about how some families deal with inflation with clever strategies to lessen the impact of inflation on their households.

 

[Halbhh]

Monthly Inflation Report and Food Inflation

The OP points out that the July inflation report will show inflation is still high. And that we will get that report about high inflation even while some prices have been falling some in the last few weeks.

This is because the inflation report is how much prices rose over 12 months, not 1 month.

That report is tomorrow:

July 2022 CPI data are scheduled to be released on August 10, 2022, at 8:30 A.M. Eastern Time

One of the most key and interesting categories of inflation is the price of food.


The last report on food inflation showed:
The CPI for all food increased 1.0 percent from May 2022 to June 2022, and food prices were 10.4 percent higher than in June 2021.


That means if someone in June 2022 bought the exact same items of (edit all types of food (not just grocery alone, but also restaurant) and the things they bought are not highly unusual items, but instead are just typical items an average person would buy, that on average we could guess they would likely spend around (for an individual at a given store it could be either higher or lower) about 10.4% more than that very same person spent on that very same overall types of food 12 months earlier, back in June 2021. (since this is an average, we have a kind of idealized average shopper at an averaged store and average restaurant eating out that is like many households averaged together)

Tomorrow, we get an update through July.

 

[Halbhh]

12 month inflation through July

Overall 12-month Inflation to the end of July basically paused vs June for an overall basket of all typical household expenditures (food/services/goods/energy/housing/etc.).
A typical household paid about the same total costs for all things combined as they did in June, without change.

This was due to significantly declining gasoline prices in July vs June, while many non-fuel expenditures went up some, balancing off the gasoline decline to a net no-change result.

Because month to month overall inflation paused in July, that caused the 12-month rate -- from July 2021 to July 2022 -- to reduce down to 8.5%, which was a slight decline from the June 12-month rate of 9.1%.

Food prices rose from July 2021 to July 2022 for an overall food inflation during that 12 month period ending in July of 10.9%.

Consumer Price Index Summary - 2022 M07 Results

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Just lately here where we live, food prices haven't been rising in August so far as I can tell, but that's just an impression based on the dozen or so prices I pay the most attention to like eggs and milk and so on, things I buy consistently every month. Also, as I noted above, I'm expecting to see more things on sale over time, but that remains to be seen, so we'll have to wait for a comprehensive report, the monthly CPI report (as just quoted for July above).

To get the national CPI report that will also tell us about food price changes in August, we will have to wait for the next report, due September 13, 2022.

 

[QvQ]

Now, normally pay $6 for eggs. Price today $12.69
The latest reports
Core inflation is down, which means demand is down for durable goods.
Production is down
Cost of production is up
Food and Gas are up but when core inflation is added, inflation evens out.

Here is where the economy is really rocky.
1) Durable goods prices are down a bit. Food and gas are up, therefore it is not production of goods, lots of stuff to buy that is bringing the core prices down. People are being squeezed into cutting back spending to afford food and gas
2) Production is down, therefore unless people start buying again, then manufacturers will cut back on labor and products needed for production.
3) PPI is up, that is cost to produce so producers are not able to reduce wholesale prices very much
4) Credit card debt is up, way up. People are using credit to buy gas and food.

This is a very bad economy, whatever the inflation rate is. There are layoffs, bankruptcies, and other very unpleasant scenarios baked into that economic model.

Now in a good economy
Production is up
Prices are down but goods are being manufactured and sold due to demand. Profits are steady.
Food and gas are a reasonable portion of income so people have disposable income.

 

[Halbhh]

Now, normally pay $6 for eggs. Price today $12.69
.

Any grocery store charging $12.69 for eggs that used to cost $6 (even a crate of 24 organic eggs) is ripping off customers.

 

[Tinker Grey]

Any grocery store charging $12.69 for eggs that used to cost $6 (even a crate of 24 organic eggs) is ripping off customers.

I searched for eggs online for a Walmart in Phoenix AZ, where I believe our interlocutor is from. A dozen was ~$3.50.

 

[QvQ]

The price may be lower at other markets however, only one market had eggs.
The same with other items. I always buy the generic brands. Now it is difficult to find anything but name brands.

 

[Halbhh]

The price may be lower at other markets however, only one market had eggs.
The same with other items. I always buy the generic brands. Now it is difficult to find anything but name brands.

If that's so, in some location, you may need to drive to a larger town.

 

[QvQ]

If that's so, in some location, you may need to drive to a larger town.

The cost of fuel to drive many miles to maybe find a better deal is a trade off. And if the prices are the same or higher? Or the store doesn't have the item?
The fact is, the price of food and fuel are up, way up from a year ago.

Here is a major consideration about inflation: If a person needs a wheel barrel full of money for a loaf of bread, that is only a problem if the person doesn't have a wheel barrel full of money. The other kind of inflation is having a wheel barrel full of money and there isn't any bread.
The inflation in 1970's was the wheel barrel full of money, one loaf of bread.
The inflation of the 1930's was, a wheel barrel full of money, no bread.

 

[Halbhh]

The cost of fuel to drive many miles to maybe find a better deal is a trade off. And if the prices are the same or higher? Or the store doesn't have the item?
The fact is, the price of food and fuel are up, way up from a year ago.

Here is a major consideration about inflation: If a person needs a wheel barrel full of money for a loaf of bread, that is only a problem if the person doesn't have a wheel barrel full of money. The other kind of inflation is having a wheel barrel full of money and there isn't any bread.
The inflation in 1970's was the wheel barrel full of money, one loaf of bread.
The inflation of the 1930's was, a wheel barrel full of money, no bread.

I just found an old receipt.

On November 4, 2021 I paid $5.99 for 24 organic eggs at Costco.

Guess what the price is today.... (egg prices are reported to have had significant inflation....but I shop around, going to more than just 1 or 2 stores in a month....)

As I repeatedly have suggested above, in post after post after post: to shop around, to more than 1 or 2 stores, to get better prices....

I'm going to Costco today actually... I think I'll be checking the price....



Nothing like facts to help clear up the false impressions from politicized rhetoric...

 

[Halbhh]

The cost of fuel to drive many miles to maybe find a better deal is a trade off. And if the prices are the same or higher? Or the store doesn't have the item?
The fact is, the price of food and fuel are up, way up from a year ago.

Here is a major consideration about inflation: If a person needs a wheel barrel full of money for a loaf of bread, that is only a problem if the person doesn't have a wheel barrel full of money. The other kind of inflation is having a wheel barrel full of money and there isn't any bread.
The inflation in 1970's was the wheel barrel full of money, one loaf of bread.
The inflation of the 1930's was, a wheel barrel full of money, no bread.

Any of us can calculate in seconds (less than 20 seconds) what it would cost in extra gasoline cost to drive to a more distant store.

Once a month, say an extra 40 or extra 80 miles for that special once a month trip.

Gas today is about 3.98/gallon on average across the U.S. AAA Gas Prices

So, if you car only gets 20 miles/gallon...

An 80 mile round trip gas cost is 4 gallons. The gas cost of 4 gallons is about $16.

If the store will save you more than $50, it's a good choice to drive that extra 80 mile round trip.

You said your typical grocery food only cost went from around $200 to over $450....

That's $250 more....

But food inflation over the last full year is %11....which would be only about $22 more...

So, you are paying as much as $230 above what you should.

It's worth it to make an 80 mile round trip to save even just $50 or $100, much less $200!

 

[QvQ]

The stores are chains. The prices are very much uniform across the state.
I read the weekly ads. I have 3 towns within the radius.
I have been doing the frugal for a very long time. There might be hoarding of generic brands as only the expensive brands are available.
If the news has an article stating Coffee is going to be in short supply, then the shelves are wiped clean. OR maybe there is a shortage of coffee.

 

[Halbhh]

@QvQ There is no shortage of coffee if you go to the right store. You just need to go to a Walmart or Costco or other larger chain that has coffee that isn't the one you've used.

To calculate gasoline cost in just seconds, round your numbers to a nearby approximate number.

Gasoline at $3.85 or $4.20 we will just round to the nearest 50cent number -- so we round that those to just $4/gallon (current national average is $3.98).

So just use $4 -- it's close enough to get a useful result.

If the one-way trip to a Costco or Walmart or other cheaper store is 45 or 54 miles, you'd just round to the closest 10 -- so, I'd round it 50 miles -- it's close enough to give an approximate number.

If your car gets 18 miles per gallon (MPG) or gets 22 (MPG), you just round it to the closest 5 -- so, here we take 20 mpg -- it's close enough to give an approximate number.

So, you use close enough numbers, which makes it easy to do in your head.

If our distance to Walmart is 1 way 50 miles, we just multiply by 2 for the full trip there and back, which in this example is then 100 miles.

So, for a close to 20 mpg car, that round trip would use up 5 gallons.

5 gallons at $4/gallon is about $20.

You can do this in just seconds. Any day.

After you have done this just once (use a calculator if you need), then you can quickly use the same number again when gasoline changes with just 1 single multiplication.

Suppose that 1 month later gasoline is closer to $4.50 -- you'd just take the number you already know: we got $20 above in our example for when when gas was about $4, and just multiply that old $20 cost by the new gas price divided by the old gas price.

So, 4.50/4.00 is the same as 9/8 == so that's an increase of about 1 part in 8.

So, the gasoline trip cost that was $20 is now $20 plus 1/8th of $20. We don't want to work hard, so you can just realize that 8 goes into $20 about 2 or 3 times....

That number: 3 (we will use the higher one) is the increase in cost.

So, for closer to $4.50/gallon gasoline, that old trip that cost $20 will now cost about $23.

If you really want high precision you would add about 20 cents per mile for maintenance costs over time (this high number is for an older car that needs more maintenance: 20 cents/mile). So, for a 100 mile round trip, that's $20 extra for the wear and tear on the car.

So, the basic full cost of both gas and maintenance is then about $40 for the trip. That's why I pointed out that at least $50 of savings is what I'd need to see to make that trip. It's a special once a month trip meant to buy a lot of stuff cheaper than you usually buy nearby.

Suppose you get unlucky and that 100 mile round trip Walmart store didn't have coffee -- well, you'd still save on all the other stuff you needed.

 

[QvQ]

Walmart had a few small cans of coffee at big can prices. I went to three different stores to find a large can of generic coffee.
Have you seen any canned apricots lately? What price? I used to pay $1.49 a can then there were a few cans for $2.50. Again none.
Some things I can buy online but I usually try to substitute. I planted apricot trees last year. Coffee is a bit harder to grow here but there is tea, for now.
It is shortages that are the real problem.

 

[Halbhh]

Walmart had a few small cans of coffee at big can prices. I went to three different stores to find a large can of generic coffee.
Have you seen any canned apricots lately? What price? I used to pay $1.49 a can then there were a few cans for $2.50. Again none.
Some things I can buy online but I usually try to substitute. I planted apricot trees last year. Coffee is a bit harder to grow here but there is tea, for now.
It is shortages that are the real problem.

Our coffee price here locally last time I went to Costco was pretty close in price as we paid a year ago, and we buy about 2 or 3 boxes of k cups for our Keurig machine at a time (100 servings per box), and store them in a closet. That lasts a while, so it will be months before I need to buy coffee again, but I'll glance at the price on the next trip just to check, even though I won't need it anytime soon.

We don't get apricots (we get prunes, and apples and watermelons). Apricots isn't a common fruit I see many places! So, that instantly tells me it would have to be a good harvest to be cheap, because it's a less common fruit, so it will be grown in fewer states. I notice it is from western states here in the U.S. mostly, and I know their have been water shortages out west and at least until just lately, many areas in drought..... Ergo, that means the harvest will vary a huge amount in a good year vs a bad year, since you don't have a 2nd big source in a different region. So, prices ought to swing up and down depending on weather in that region where they are grown.

But, maybe it's going to be lower prices soon for canned apricots:
Apricots: 2022 production to double in one year
"As of August 1, 2022, the apricot production of 2022 is expected to more than double over one year (+ 116%). After two years of low harvests, the current season marks a return to yields that are more in line with production potential. This observation can be noted in all the production basins. In July, prices, which were down over a year, remained higher than the five-year average. Sales are fluid both on the domestic and export markets, with demand favored by high temperatures," says Agreste.
Apricots: 2022 production to double in one year

 

[QvQ]

I did research into apricots when the cans disappeared. The harvests have been good. The export increased by a huge amount, mostly to China. You might do some research into that.

 

[Halbhh]

I did research into apricots when the cans disappeared. The harvests have been good. The export increased by a huge amount, mostly to China. You might do some research into that.

Glad that you have your own trees!

Is the 2022 harvest already in? How is your own harvest looking this year on your own trees?

(just in case you missed: harvests have been poor in 2020 and 2021, but should be good this year:
Apricots: 2022 production to double in one year
"As of August 1, 2022, the apricot production of 2022 is expected to more than double over one year (+ 116%). After two years of low harvests, the current season marks a return to yields that are more in line with production potential. This observation can be noted in all the production basins. In July, prices, which were down over a year, remained higher than the five-year average. Sales are fluid both on the domestic and export markets, with demand favored by high temperatures," says Agreste.
Apricots: 2022 production to double in one year

 

[QvQ]

Is the 2022 harvest already in? How is your own harvest looking this year on your own trees?

It doesn't matter how much fruit the US produces if the produce is exported to China.

Bread Yeast, last year for months, couldn't find it anywhere. I switched to baking powder bisquits.

It takes several years for a tree to fruit.

Halbhh, I have done this "frugal" for years. In the old days I grew gardens, canned everything. I had chickens. It is an expensive and time consuming hobby.
The fact that I am returning to that is a very bad sign because i don't do it for fun anymore. Chickens, costs for feed and protection from predators, not really worth it but I am considering it.

 

[Halbhh]

Halbhh, I have done this "frugal" for years. In the old days I grew gardens, canned everything. I had chickens.

Sounds like me. I grew up in the country and we had a large garden, a couple dozen chickens, a milk cow, and her offspring we raised for meat, and didn't have to buy all that much groceries, as the most expensive things we already were raising. Our chickens produced pretty well, and we probably came out ahead on them, as we didn't have to buy much of their food (just some milo, which is inexpensive), since they free roamed and there was plenty of bugs and such for them.

Chickens do need tending -- the minimum was we had to keep them in a closed nightly coop, predator proof, so I had to herd them in the evenings and close them up. If a fox showed up, we had to shoot at it, and keep the chickens penned a few days. Maybe the worst part for me was that I had to clean out the chicken poop from those 2 dozen, about 1-2 times a week. That's...nasty.

I don't have that life today (or not yet; we just have a very prolific tomato plant were we live right now, without a good spot for much garden), but I grew up with it, and I had to tend the chickens and do most all of the garden work, and even milk the cow about 1/3rd of the time for a year or 3.

 

[QvQ]

Inflation is bad. It is high but it is shortages that are the real sign of final decay in this country. US productivity is down to 1948 levels.
Maybe it will smooth out but...