The above headline comes via Bloomberg.
The story begins:
Food inflation has arrived, according to newly released data from the Bureau of Labor Statistics. And that means slimmer profits for many already-ailing restaurants even as diners pay more for meals.
Full-service restaurant prices rose a record 0.9% in June from a month earlier. At the same time, home cooking grew costlier: Grocery prices rose 0.7% from the prior month and 5.6% from a year ago, the largest increase since 2011.Just take a look at the chart above. The gains in recent months are spectacular.
These are the percentage gains of basics such as potato chips, ice cream, beef roast and cheese.
As I have consistently warned, the price inflation would first emerge in the things we continue to buy despite the lockdowns.
The discounts in prices of things we are not buying are continuing to damper the price gains of government price inflation indexes BUT the declines in the discounted goods and services will bottom out over the next couple of months and then we are going to see the price indexes skyrocket the way these individual goods are.
-RW
Same bag of potato chips cost about 3.50 last few years, now $5.00
ReplyDeleteWhat do you consider the limiter on an upper bound for inflation?
ReplyDeleteAs inflation sets in, do you anticipate the Fed will increase rates, as Volcker did? How would that be politically feasible?
Or do you predict that inflation will somehow peak and then fall without Fed intervention?