Thursday, April 7, 2011

The View on Inflation from the Streets of America

Reuters went out on the streets of America looking for people who thoughts on price inflation. They weren't hard to find:
"The government says inflation is low, but that's not what I'm seeing at the grocery story," Jorge Alberto, an 88-year-old retiree in Miami, said walking out of a supermarket. "My pension is being put to the test."...

"I don't think the Federal Reserve has a clue about us little people," said J. McKeever, an instructor at the Montessori Institute of Milwaukee.

"I am very frugal, so I watch what I spend. And what I have noticed in recent months is that I have less money before than I used to, while making the same amount of money and having to pay for health care," she said...

"There are no salary increases and you know you have the pressure at work to cut, but on a personal level everything else keeps going up. You never seem to be able to catch up," said Paty Peterson, 50, of suburban San Francisco...

"My grocery bill is up 30 percent over last year," said Cheryl Holbrook, 47, who educates her seven children at home in Mobile, Alabama. "We have to pinch every little penny and make it squeak."...

Eileen Reilly, 72, a retired resident of the Chicago suburb of Geneva, said higher gasoline and food prices have forced her to drive less, buy a cheaper food for her dog Lucky, and stop taking pills for a liver condition she declined to identify.

"My doctor said I could die if I don't take them," Reilly said, rolling her eyes. "I told him that I'm 72 and I'll be dead soon as it is. Besides, it was either the pills or the car and the dog. And I need the car and I love the dog."...
I don't think it is a coincidence that most of the quotes Reuters was able to get came from the elderly, who are likely on low fixed incomes, and others who appear to be on very tight budgets. They are the ones that always feel the price inflation impact, even when the inflation is at moderate to low levels.

For those, with a bit more pocket change, a price increase here or there is not going to change a life style, so it is a little less noticeable.

But the next round of price inflation is going to be much more noticeable, for those people on very low fixed incomes, it is really going to hurt. For the rest of us, it is going to be much more apparent and may alter buying patterns for some of us.



    Story in today's NY Times about how government biofuel mandates and subsidies have played a role in rising food prices. The story mentions a bunch of other factors contributing to price increases, but DOESN'T mention central bank money printing.

    I've noticed, in all the recent MSM stories I've read about price inflation, the writers studiously avoid any mention of monetary inflation.

  2. This can't be so becuase Krugman said it would not happen.

  3. With the price increase of cheese getting larger, people will begin to notice the serious inflation when buying dollar menu items requires a $5 note.

  4. "'I don't think the Federal Reserve has a clue about us little people,' said J. McKeever, an instructor at the Montessori Institute of Milwaukee."

    Interesting that a question about inflation gets a response with the Fed implicated. Also, this quote does not appear in the story any more.

  5. Some notes on inflation in central Texas:

    I've noticed Starbucks has increased it's prices twice since the summer of 2010.

    Price of generic off-brand microwave pizzas has increased from $1.19 to $1.30 in addition to the packaging being noticeably downgraded and actual portion size going down slightly.

    Grocery meat dept chicken tenders averaged about $6-7 per pound a few months ago, now average $7-8.

    Hot dogs sold as a snack at a gas station I frequent used to be sold in nice looking color printed cardboard boxes, now cost $.10 extra and are sold in cheap white styrofoam containers.

    My electric bill is about 8% more than what it was last year, same month.

    Cost of basic solid color T-shirt at Wal-mart increased from $7 per shirt last year to $9 per shirt last month.

    Cost of Adidas Men's Superstar 2G shoes up $40 a pair 2 years ago to $51 a pair last week at local mall shoe store.

    Of course, gas is up, but I can't blame that completely on the Fed (see US imperialism and new wars making things worse.)

    I am going to ask for a raise pretty soon.