Tuesday, April 22, 2014

The "There Is No Inflation" Report [Chipotle and Netflix Edition]

Sam Ro at Business Insider provides the news:
Simply put, the American consumer has been getting squeezed to line the pockets of corporate America and its investors.

However, we're now seeing more evidence that businesses will attempt to bolster their profits by raising prices on their customers. Chipotle and Netflix recently announced that they would soon be raising the prices of their goods and services...



  • Chipotle Mexican Grill's CFO announced it would raise prices by mid-single digits (~5%) by the end of the quarter. This comes as the burrito chain faces rising food costs. "A 5% increase would raise the cost of Chipotle's chicken burrito from $7.81 to about $8.20 in New York," reported BI's Hayley Peterson.



  • Netflix is raising the prices of new subscriptions by $1 to $2 per month. That would represent a 12% to 25% increase over a $7.99 subscription. "The company justified the price increase by saying it has greatly expanded its streaming video library," reported BI's Steve Kovach. "It'll use the new revenue to acquire even more content."
  • 7 comments:

    1. Ah but the Krugman, Jerry Loongang bunch would retort:

      If Chipolte's prices are raised, consumers can go to the cheaper Taco Bell.

      If Netflix's prices are raised, consumers can go to the cheaper library.

      So there is no inflation because of substitution!

      ReplyDelete
      Replies
      1. When I posted this article on my Facebook, one of my liberal friends actually made the Taco Bell retort....

        Delete
      2. Just respond to his post with 2 words that your buddy is suffering from: Stockholm Syndrome.

        Else, use Zero Hedge's substitution example: From steak to beef-burgers, from beef-burgers to rat-meat between buns!

        Delete
    2. From Phase I (Stealth 'Inflation') to Phase II (Nominal 'Inflation')

      By 'inflation' i mean the Statist Newspeak definition used by Wolfie and his maggots (not the oldspeak one we Austrians still use).

      ReplyDelete
    3. Bob,

      You are discrediting yourself. The Chipotle price increase is driven by higher beef prices, which is the result of droughts and not inflation. Netflix's price increase is driven by additional content and not inflation. In order to single out inflation as the cause, all other variables would have to be controlled. If beef prices rose without supply having somehow been diminished, the inflation may be the culprit. But that's not the case here.

      ReplyDelete
      Replies
      1. You need to read the EPJ Daily Alert to understand what is going on with prices, particularly where there are changes in supply. It is not as simple as you would like it to be.

        Delete
    4. Well, I happy that it hasn't hit gold and silver yet, so I can continue to accumulate.

      ReplyDelete