• Food prices increased around 20% from 2021 through 2023 and have changed little since. This applies both to the cereal and bakery products index and the food at home index.
• After soaring as much as 40% in the wake of the pandemic, the price of used cars and trucks have declined since late 2022.
• In the last few months new cars also dropped into negative inflation territory.
• Inflation for durable and non-durable goods has cooled significantly since the 2022 peak with durable goods in negative territory since 2023.
• In all states across the country, the change in median income required to buy a home soared from 2019 – 2023 usually in multiples of the change from 2014 – 2018. California of course tops the list: 2% from 2014 to 2018 vs 18.8% from 2019 to 2023.
• Overall hourly wages have lagged inflation since 2021.

The article also presents some stark economic realities starting with this contrast between how people feel about their own economic circumstances versus that of the country as a whole: “In the Fed’s 2023 Survey of Household Economics and Decisionmaking, the share of those saying they were doing ‘at least okay’ remained over 70%, lower than the 78% peak hit in 2021, but roughly where it was before the pandemic. By contrast, a dismal 22% rated the national economy ‘good’ or ‘excellent’.”

Additionally, there are important shifts in measurements of well-being:

• There is unsurprisingly a direct inverse correlation between income and the share of households self-reporting difficulty in meeting expenses. However, this share has trended upward since late 2020 for households making at least $100,000. Households below that income level have generally self-reported small improvements in the past three and a half years.
• Through the end of 2023, inflation-adjusted net wealth of Black households has fallen below levels from the start of 2019.

These data paint a picture of an economy where inflation still weighs on the minds of Americans even as certain inflation pain points have come under control. Given this environment, it is no surprise that the Fed has slow-rolled expectations for rate cuts. However, with the market now pricing in near certainty for a rate cut in September, the Fed may finally be forced to take the plunge and test out inflation expectations.

A Trade on TLT

Since 2021, the core CPI (the consumer price index) has taken the escalator up and the stairs down. Seemingly in expectation of little additional improvement in inflation, long-term bond yields seem to be settling into rangebound trading. Accordingly, I drew new presumed trendlines for the iShares 20+ Year Treasury Bond ETF (TLT) to adjust my trading rules for fading TLT.

Prior to the June 3rd breakout for TLT, I cound consistently fade TLT from the top of a downward trading channel (the dashed blue line). After the breakout, I faded TLT rallies with an expectation of tests of the previous downward channel as support. The soft CPI print for June that drove September rate cut expectations makes me think a new sideways trend is unfolding. The chart below has horizontal black lines that represent the tension and tug and pull between a slow cooling in inflation and the potential stimulative impact of a rate cut cycle ahead of any significant economic weakness.

I used the top of the trading range to twice fade TLT with put options. However, I was not patient enough to see TLT below its 20-day moving average (the black dashed line above). Thus, it is possible I will eventually move the bottom of the trading higher.

Be careful out there!

The post An Inflation Story appeared first on Inflation Watch.

This price drop has put additional pressures on some of Europe’s poorest regions.

For more details see “Europe’s (olive) oil crisis“

The post Olive oil prices continue to drop appeared first on Inflation Watch.

To add insult to injury, the cafeteria will now be charging by the ounce for frozen yogurt. I am sure this is a “Dr. Duru” policy given I am guilty as charged for piling on the chocolate good stuff as high as I can.

The inflation accountants may be relieved to know that we have also received expanded meal service in recent months. Perhaps a hedonic adjustment evens everything right out…

The post Prices going up yet again at the company lunch counter appeared first on Inflation Watch.

Here is a key quote that describes the situation:

“World food prices tracked by the United Nations retreated for a fifth consecutive month in November, the longest decline in more than two years. The U.S. government said Dec. 9 that combined global inventories of corn, soybeans and wheat will be 3.2 percent larger than anticipated a month earlier. Cocoa capped its longest slump in 50 years last week on increasing supplies from Ivory Coast, the world’s biggest producer.”

DBA, the PowerShares DB Agriculturae Fund ETF, tells the story. the ETF has now sunk to 14-month lows. Today’s price marks the previous post-recovery high in 2009.

The post Agflation finally slowing down appeared first on Inflation Watch.

Her general conclusion is that it is cheaper to do the “non-glamorous” things at home, but glamorous activities like raising chickens, goats, and turkeys cost too much in infrastructure to make it worthwhile. It is definitely cheaper to make your own bread and muffins but more expensive to make candied ginger. It is cheaper to buy lemonade than make it – not to mention all the effort it takes to squeeze the lemons. Reese also addresses convenience, food quality, and moral choices.

The book looks like a worthwhile read for those considering to beat higher food costs with homegrown and homespun creations.

The post When is it really cheaper to make your food at home? appeared first on Inflation Watch.

On a day in which commodity prices and stocks took another plunge, DemandTec released the results of a poll of 16,000 leading retail and consumer products users that asked about pricing expectations:

“Nearly 50 percent of respondents agree that shelf prices will rise moderately as both retailers and manufacturers absorb some margin compression in the coming six months.”

Although it is not 100% clear, the poll seemed to focus on shelf prices of food products. A lot of the margin compression will be coming from commodity prices.

The post DemandTec reports that shelf prices for food will rise “moderately” appeared first on Inflation Watch.

Other points from the video on year-over-year price changes:

Ground beef up 16.7%
Sirloin steak up 6.9%
Boneless chicken breast down 4.0%
American cheese up 3.6%
Head of lettuce up 14.9%
Tomatoes down 6.5%
White bread up 8.3%
Potatoes up 21.4%
Wine up 0.4%

The post July 4th BBQs are more expensive this year appeared first on Inflation Watch.

The post Prices going up at the company lunch counter appeared first on Inflation Watch.

His closing remarks on the topic are a vivid reminder of one of the many reasons I care so much about “Inflation Watch”:

“Inflation is a very personal enemy for most Americans who live paycheck to paycheck. When your paycheck does not get larger, and the prices go up – you must cut something out of your life. And when Fed Chairman Bernanke says inflation is low – you know that he is addressing the segment of the population which does not live paycheck to paycheck.”

The post Hansen argues the CPI should include food prices appeared first on Inflation Watch.

* Ground beef up 6.8 percent month over month, and 11.1 pct year over year.
* Butter, up 3.2 percent monthly and a stunning 27 percent over the past year.
* Coffee, up 6.5 percent and 16 percent.
* Potatoes, up 3.6 percent and 7.1 percent.
* Lettuce actually fell 5 percent monthly after a spike higher in December, but is up 5 percent over the past year.
* Bread up 1 percent and 3 percent.
* Chicken up 0.8 percent. and 4.3 percent .
* Egg prices have been fairly steady.
* Milk, down slightly month over month, but up 2 percent year over year.

Orange juice and wine are actually down year-over-year, 1.6 and 6.9% respectively.

Overall, Cox finds the inflation gauge from the CPI very unsatisfying given fuel and food now consume over 12% of after-tax income. As deflation fears are becoming a distant memory, I expect the grumblings to grow ever louder that inflation feels and is much higher than official statistics are telling the general population.

The post The impact of rising food prices in the U.S. appeared first on Inflation Watch.