Food inflation makes an unwelcome return
Just when you thought it was safe to go back to the grocery store… Food inflation is picking up steam again.
The Producer Price Index (PPI) for food rose 0.6% in July, the biggest increase since February. On an annualized basis, This equates to a food inflation rate of 7.6%.The finished consumer food index also rose 0.6%, following a 0.4% increase in the previous month.
July saw some big price increases that American households likely noticed: Fresh fruit and melon prices rose 10.3 percent. Beef prices increased 7.7 percent. Pork prices increased 1.8%. Coffee prices increased 3.3%.
Index of these items Seasonally adjustedSo the increase isn’t due to a seasonal preference for iced coffee or a surge in grilling burgers and ribs.
The cumulative effect was devastating. Since Biden took officeThe producer price index for food sold to consumers is 26 percent increaseThat’s five times the inflation seen during President Donald Trump’s presidency.
A summer of rising food prices suggests inflation is likely to remain a top concern for voters in the run-up to Election Day, according to the latest YouGov poll. economist Show 96% of voters say inflation is an important issueOf those, 77 percent say it is “very important.” 24 percent say it is “the most important issue,” more than double the percentage of any other issue.
The study, released Monday, Financial Times Showed 78% of registered voters say inflation is one of the top three causes of personal financial stress. Over the past month, the most common answer was inflation, followed by income at 45 percent and rent at 31 percent. When asked to name the single biggest source of personal financial stress over the past three months, 45 percent said inflation, far surpassing income and rent (13 percent each).
And food inflation is at the heart of rising price concerns. 78% of people chose food inflation The items most commonly cited as having a major impact on household finances were household goods and daily necessities (55%) and gasoline (51%).
July’s spike will be all the more unsettling for voters who were told food inflation was a thing of the past. Food prices, as measured by the PPI, rose modestly in March and actually fell in April and May. But they rose 0.4% in June and rose again last month. This is because Pessimism over food prices has become more well-founded The reality is less optimistic than the optimistic predictions of journalists, economists and Democratic politicians who tell us we have overcome food inflation.
Kamala is haunted by the specter of rising food prices
Kamala Harris has good reason to be concerned about inflation. 39% of registered voters cite Democratic policies as one of the top three causes of rising prices.According to Financial Times The poll found that “big corporations taking advantage of inflation” trailed behind at 59%, ahead of “the long-term effects of the pandemic” at 35%. Just 26% named the Federal Reserve, and only 24% cited “Republican policies.”
Vice President Kamala Harris delivers a speech marking the one-year anniversary of the Controlling Inflation Act in Seattle on August 15, 2023. (Official White House Photo by Polly Irungu via Flickr)
Harris is following in Joe Biden’s footsteps by shifting the nation’s attention away from Democratic policies. “Corporate greed” After not mentioning inflation for a few weeks, he recently started saying things like he did in a speech in Michigan: Chris Giles Financial Times):
We believe in a future where we lower the cost of living for American families so they have a chance not just to get by but to get ahead. Because while our economy is strong by many measures, the prices of everyday items like groceries remain too high. You and I know that.
When I was Attorney General, I worked to crack down on price fixing. And if I’m President, fighting to lower prices will be my number one priority. That means fighting big corporations who illegally gouge prices, fighting big corporate landlords who unfairly raise rents for working families, fighting big pharmaceutical companies and capping the price of prescription drugs for every American. That’s the work we’ll do together.”
The problem is Harris She doesn’t actually believe half of this, and the half she does believe isn’t true..
Giles FT To point out:
Notice that there is no mention of disinflation, but there is mention of an ambition to lower prices and specific areas where Harris would like to act. Taken literally, this is a call for the Federal Reserve and other branches of government to lower the price level and aim for deflation. If this were literally true, the only valid response would be “you’re not serious.”
Giles concludes: Harris’s promise to lower prices shouldn’t be taken literally“Ultimately, take Harris’ word seriously, but don’t take it literally,” Giles wrote. Harris promises to lower prices, but he doesn’t mean it.
The other half of her argument is that inflation is mainly caused by “illegal price gouging” or “price manipulation”. The problem with this theory is that food inflation last month was driven by the profit margin ( “Trade Services” It was reduced with PPIs.
Overall trade in services fell 1.3% in July, the biggest monthly decline since 2015. Trade services to food retailers plummets 3.7%That was the biggest drop since 2009. Compared to a year ago, retail food profit margins are just 0.2% higher, below nearly every major measure of inflation. Whatever is driving food inflation, it’s not greed, price manipulation, or price gouging.
of FT The poll found that 38% of registered voters want Harris to take a completely different approach to economic policy than Biden, while another 23% want to make major changes. Following Biden’s “greedflation” playbook won’t work.
