Tuesday, October 11, 2011

Your Peanut Butter and Jelly Sandwich is About to Get Much More Expensive

The price of peanut butter at the commodity level has gone up from $450 a ton to $1,150 a ton in just one year. Now, retailers are beginning to raise prices.

WSJ reports that wholesale prices for Jif are going up 30 percent beginning in November. Peter Pan will increase its prices by as much as 24 percent in a couple of weeks. Skippy prices are already 30 to 35 percent higher now than they were a year ago, and Kraft Foods Inc., which launched Planters peanut butter in June, is raising its prices by 40 percent on October 31.

Bottom line: It will also be much more expensive to do this.

Let's see how Paul "I see deflation" Krugman explains the rising cost of a peanut butter and jelly sandwich.

(Thanks to Andre Grillon)


  1. "Let's see how Paul 'I see deflation' Krugman explains the rising cost of a peanut butter and jelly sandwich."

    You think rising peanut prices is a sign of inflation rather than a result of the worst growing season in decades? Why not, I guesss. I mean, it was only in the lede paragraph of the article you cite.

  2. What's the sudden cause of this? Bad peanut harvest?

  3. I really hope that kids is not allergic to peanuts.

  4. I do read your posts everyday, but, 60 seconds more of research would've of shown you a 17% drop in production because of bad weather/crops which of course contributes to higher prices.

    However, i have no clue who/what that site above is about and or the legitimacy of it, maybe you can find other sources.

  5. I import reasonable size quantities of cocoa beans from Asia and follow cocoa prices over time. I follow what is happening with cocoa growers. If you drill down you can find bad supply stories regarding cocoa.

    Horror stories out of Indonesia about quality or falling yields in some parts of Africa. None of this matters as the world wide cocoa market is far greater than group of growers in single countries / areas.

    Bad harvest does not explain ever increasing prices.

    No supply issues in 2000 but in 2011 all the supply issues have happened at once to increase prices. Very strange way to think.

  6. A 17% drop in production would not account for the nearly 3x increase in cost per ton. So what accounts for the rest of the increase in cost per ton and on the shelves.

  7. @Anonymous 2:47

    That all depends on the price elasticity of demand. For some very inelastic goods, such a price increase would certainly be possible.

  8. Al-girta wrote, "Bad harvest does not explain ever increasing prices."

    I was thinking the same thing.

    Last year was a very bad year for pumpkins, I thought the price would go up as a result, it never budged. This year isn't good for pumpkins either, still no price increases.

  9. Peanut butter is poisonous to humans.
    Prices of everything will double in the next year thanks to money printing.