Here’s the question of the day: Do you believe there is food price deflation?
The reason I ask is the Wall Street Journal reports Food Price Deflation Cheers Consumers, Hurts Farmers, Grocers and Restaurants.
The U.S. is on track this year to post the longest stretch of falling food prices in more than 50 years, a streak that is cheering shoppers at the checkout line but putting a financial strain on farmers and grocery stores.
The trend is being fueled by an excess supply of dairy products, meat, grains and other staples and less demand for many of those same products from China and elsewhere due to the strong dollar. Lower energy costs for transportation and refrigeration also are contributing to sagging food prices, say economists.
“Deflation is a godsend for consumers,” said Bob Goldin, vice chairman of food consultancy Technomic Inc.
Nationwide, the price of a gallon of whole milk on average was down 11% to $3.06 in July over a year ago; the price of a dozen large eggs fell 40% to $1.55 in the same period.
The price of food at home is down 1.6% on a seasonally unadjusted basis in the 12 months through July, says the BLS.
Stephanie Hegre, a 46-year-old nanny in Thousand Oaks, Calif., has noticed a drop of about 10% in her weekly food shopping bill. Her 16-year-old twin daughters go through a lot of milk, meat and bread, adding up to an average weekly grocery bill of about $200.
“I feel it has dropped by $20 a week which, when you’re on a budget, is noticeable,” said Ms. Hegre, who has been stockpiling staples in case prices increase. “We freeze bread and buy two weeks’ worth of bacon at a time,” she said.
The glut is so severe in some places that dairy farmers have been dumping millions of pounds of excess milk onto fields. The U.S. Department of Agriculture just bought $20 million worth of cheese in response to hard-hit dairy farmers’ requests. The cheese was given to food banks and others through USDA nutrition-assistance programs
Today’s Question
The Freezer
Freezing 2 week’s worth of bacon is nothing. I freeze six months of bacon, chicken, pork chops, and even more of some items.
Moreover, bacon is no bargain at all. A decent sale price is two 16-ounce packages for $5. I have not seen that for a long time.
Yet, prices are indeed coming down. The problem is, prices are not down to where they used to be.
Beef is a prime example. The sale price for rib-eye steaks used to be $4.99. That held true for at least 10 years. Heck, I could occasionally (but rarely) get beef tenderloin at that price.
Now, rib-eye steaks on sale are $7.99 a pound.
Pork remains a general bargain. Center cut pork chops were roughly $2.49 a pound on sale for 15 years. Yes, sometimes they were cheaper. But sometimes the sale price was $2.79 or $2.99.
On sale, you can still get $2.49. Sometimes you need to buy a roast and have it cut (or cut it yourself). So … cut it yourself!
Curiously, I have seen boneless roasts at a cheaper price than bone-in. It pays to know and understand what you are getting.
Bacon seems outrageous. And you better be careful. I now see 12 ounce packages regularly.
Overall, led by beef, sales prices are indeed lower. But sales prices just are not what they used to be.
Most foods properly wrapped will last at least six months. I grew up this way. That’s how my parents shopped.
My advice: Get a bigger freezer! My food cost increases have been minimal despite huge increases in non-sale prices.
Mike “Mish” Shedlock
If you want to remain alive for longer than a few years from now, you have to look beyond beef and pork etc. Vegetable prices have been steadily rising. No, there is NO food price deflation.
Touche!
As Mish listed in the options, “No, are you Nuts!”
This is only because the lower price of fuel is finally being reflected in some products. It will be short lived though.
Are you kidding me? Food DEflation? Seriously? No way!
How is this possible when the gov’t/Fed complex e-prints vast quantities of dollars EVERY DAY? This debases the currency, which decreases the purchasing power of the dollar. Isn’t this the very definition of inflation? The purchasing power of the dollar has decreased over 95% since the Fed was founded in 1913.
Inflation is an (unconstitutional) stealth tax. I’d call it theft. Just go visit your local grocery store to see this in action. Let’s not even mention college tuition or healthcare.
http://www.abundance-and-happiness.com/images/x1913-2013-dollar-decline.gif.pagespeed.ic.C0E9spXnNe.png
http://www.abundance-and-happiness.com/images/dollar-bill.jpg
http://www.shadowstats.com/imgs/sgs-cpi.gif?hl=ad&t=1471365467
http://chapwoodindex.org/
The Chapwood Index reflects the true cost-of-living increase in America. Updated and released twice a year, it reports the unadjusted actual cost and price fluctuation of the top 500 items on which Americans spend their after-tax dollars in the 50 largest cities in the nation.
Much deflation in package size.
It’s been a hello of a long time mish since we got a store report on chicken special’s. Those were the good ole years
I noted significant food prices increases across the board from 2009 though 2012 and part of 2013. Then they leveled out and fell somewhat. But Mish is right. The prices never came down to the pre-2009 levels.
Keep in mind that price inflation includes smaller packaging containing reduced portions of the food. That has been VERY common.
And I agree….beef prices have skyrocketed. So have fish prices. I used to get fresh salmon steaks (ocean caught, not farm fed) for about $5 a pound. Now I can’t get them for less than $8 a pound.
But it’s interesting. If I drive a distance to the Asian supermarkets I can get whole salmon (including the head) for about $3 a pound – but their pricings increased of late also. What I love about the Asians is that they cut it up for free. Some of the American supermarkets charge me extra to cut it. Go figure. How can an Asian supermarket (independent) sell at a 70% discount from the price I pay to an American chain supermarket that deals in HUGE quantities of volume?
But we are VERY lucky in America with food. We have ABUNDANT amounts relatively cheap compared to the rest of the world. Hence, we have an ABUNDANT amount of fat people. Prosperity is not necessarily good for your health.
“How can an Asian supermarket (independent) sell at a 70% discount from the price I pay to an American chain supermarket that deals in HUGE quantities of volume?”
Part of it is no doubt the layers of management and bureaucracy at the large chain stores.
But it could also be due in part to illegal alien employees and/or owners. They have no need to pay Social Security taxes or follow OSHA regulations.
And they’re willing to accept 5% profit margins.
Go on a ketogenic diet and you can live quite cheaply.
Exactly. I haven’t noticed the smaller packaging/portions because I don’t even go down that aisle. A head of lettuce is still the same, and it’s still 98 cents depending on the season.
I skip almost the whole store. A whole aisle for nothing but cereal, another for cookies, candy, chips, sodas, frozen dinners and bread. All of it high carb, high mark up, high chemical gmo fake food. It has the highest prices per pound and slowly sickens you. The stores love it when you buy this.
I agree, There are small areas of decreased prices. But overall I do not see lower prices. I also have a chest freezer and keep it almost full of foods I find on sale. When I find a really good price, we stock up for up to a year supply. And then pack it really well for later use. But I must say that overall prices are still climbing. With a few bright spots in some types of beef and dairy products. The best sale prices of this so called food deflation are still more than we were paying for regular priced Items just a few years ago. Some examples are, tomato sauce was often 8 for a dollar on sale and 4 for a dollar regular price. Now the lowest sale I see is 3 for a dollar. Canned vegtables were often 3-4 for a dollar. Now the best price is 2 for a dollar on the best sale in months. Ground beef 85 to 93 percent lean was often 1.99 to 2.49 per pound. Now it’s 2.99 to 3.97 on the best sale I can find. Boneless Pork loin chops used to go for 1.75 to 1.99 now the best sales run 2.75 to 2.99. And I cut them up myself. I used to pick up boneless chicken breasts for .99 in just a few years the best sales are 1.77. I was getting NY strip for 3.47 and cutting myself, now they are 5.97 on a super sale. Boneless Ribeye was 4.97 or less, it now 7 bucks plus. We used to get 10 pound boxes of bacon for a buck a pound. Its now 1.49 on the best sales in months. Even fresh produce is much higher on sale than regular prices just a few years ago. Most nuts on sale are twice what they were 5 years ago on regular price. Chips are half the ounces and the same price. We used to get name brand 12 pack cola 4-5 for 10, they are now 3 for 10 to 11 bucks. The off brands are now 4 for 10 on sale. I have to hunt for weeks to months to get low prices. We have not changed our eating habits. And do not have expensive tastes. And I can tell you our grocery bills are not really coming down.
If you buy a freezer be sure to factor in the cost of the item and the electricity costs that accompany it. A freezer is one of the biggest electricity hogs in a household.
I can still get drumsticks @ $0.69 a pound. There are so many creative ways to cook chicken. Sometimes I don’t even think I’m eating chicken it’s so darn good. Sauces make the dish. And good homemade sauces are dirt cheap. Chicken in America sells at a bargain.
I remember when supermarkets used to give away beef bones (for soup) and liver. The other day the wife bought fresh beef liver at a discount price of $2.49. Cooked properly it makes an excellent meal. My dog loves it too.
Not a big pork lover. But pork is sold on the cheap. I can get pork chops on sale under $2/lb.
All Americans should kiss the ground we walk on for our food prices and selections. All of us eat like kings and queens compared to the rest of the world. Let’s be thankful for that!
The biggest chest freezers cost less than $5 per month to run. I have a medium size chest freezer. I save far more than the $2.75 it costs to run it per month. We are a family unit of two. I do realize your individual circumstances and food preferences will effect this. But .69 chicken legs are not seen that often anymore. That sounds like a stockup item to me. In our area, They have been averaging $1.49 or more. I did see a sale for $.69 this week. But that does not happen often. Sometimes we go weeks without shopping. This saves on impulse purchases and cost of trips to go shopping. We actually have not set foot in any store for three weeks. And have not done any large grocery shopping in 7 weeks.
Oh, even at the American chain supermarkets I can easily get nice chicken drumsticks @ $0.99 lb. But I shop frequently at the ethnic markets and get them for $0.79 lb. regular price and @ $0.69 lb. on sale. The quality is just as good or better than at the American stores. I would NEVER pay $1.49 lb. for drumsticks. That would be a ripoff.
You make a good point re: chest freezers. Perhaps the energy savers are much more efficient today. $2.75-$5 a month sounds like a bargain to me. Or perhaps electricity is cheap where you live. But you failed to mention the purchase price. I assume a freezer runs at least $500 for a new one. It would likely take years to break even for a household of 2.
re: ethnic supermarkets
my eyes were opened a couple of years ago when I and a Latina co-worker organized a party for a shop gal that just had a baby. The Latina took me to a perfectly decent ethnic supermarket – we bought huge amounts of bar be Qué meat, chips, salsa, etc. all the trimmings for 25 hungry factory workers for under $100 !
everyone was stuffed and lots of excess food went home.
If we had gone to a mainstream chainstore, I am guessing the cost would have been 2x
I just read a few weeks ago where they were storing cheese in warehouses (similar to what they did with aluminum and copper) because there was such a glut. You can always sell a product, but it has to be priced right. But instead of reducing prices, the government just buys it, which keeps the price up. The government has its hand in every pie. “Mustn’t let prices go down; we could have that dreadful deflation.” Do we ever get a break?
Prices here in Canada have gone up tremendously. I would say that, excluding milk, everything has increased by at least 20 – 25% in the last few years. And, yes, reductions in package sizes. Increase the prices, reduce the package, make you buy 3 of something to get a decent price.
I keep telling everybody to only buy what they absolutely need. Prices will only come down if we stop buying so much. Make them reduce prices. With oil costs way down, we should be seeing reductions. Somebody is making some good money, and they don’t want to see that passed along. “Must keep stock prices up; must pay out bigger dividends.” They just don’t want to see any reductions.
If we keep buying, prices will stay up. Squeeze them.
When the USDA buys milk to make “government cheese”, they do it so dairy farmers won’t slaughter their unprofitable herds which would make milk much more expensive when the price recovers but all the cows have been eaten. It can take less than a year to go broke feeding cows for no purpose, but it takes many years to rebuild a herd.
Meanwhile the cheese is donated to food banks or powdered and given as aid to starving foreigners (who then want to kill us, but I digress).
I’ll do this in two postings Here’s some live cattle history:
http://cdn.tradingeconomics.com/charts/commodity-live-cattle.png?s=lc1&v=201608310445n&d1=20060101&d2=20161231&area
Now here’s commodity beef history. Open the 2 graphs side by side and look at them… Something has really changed. i don’t have the answer, but they should flow relatively together and they just don’t. Is there a new middle man in New Yawk or something?
http://cdn.tradingeconomics.com/charts/commodity-beef.png?s=beef&v=201608300830n&d1=20110101&d2=20161231
I don’t know if the beef world is similar, but in the grain (and many other commodity) markets, the middle men and higher level processors use hedging to help smooth their cash flows.
This helps them, of course, when prices are rising. But it can hurt them when prices are falling.
So there is often a lag in price declines between the commodity itself and the end product.
I think its due to legislation in 1999 that allowed the big banks to trade commodities. Food was Miah’s catagory, but when you look at historically smooth commodities pricing, copper and natural gaa especially, show nasty levels of manipulation. Now that the markets have slowed, commodities are taking a hit.
Prices for packaged food is falling but the contents inside the packet is falling even more.
This is interesting. We have discount stores in the area that used to sell all items for $1 or less. The name implied it. Food, groceries, trinkets, etc… Now they have added items that cost $1.99 or more. Bacon, milk, cheese, etc… We used to buy a big bag a grapes (2-3 lbs.) there for $0.99. Now grapes are sold by the pound @ $0.99. The package size for most items (cans and boxes) began shrinking in 2009. Now they’ve shrunk to about half the size they were in 2009 at the same price of $0.99. So food prices are NOT decreased in the last 6-7 years. They’ve increased remarkably. The price reductions due to lower gas and transport costs are very temporary. Enjoy it while we have it. They’ll be gone before you know it. If you include meats and the basic staple foods – I would say that food prices have easily doubled since 2009. Probably more like 3x’s more for many foods. So don’t be fooled by the recent price reversals.
“A Cheese Glut is Overtaking America” – Wall Street Journal – May, 2016:
“America has built up a glut of cheese so big that every person in the country would need to eat an extra 3 pounds this year to work it off.
And it isn’t just cheese. The growing stacks of cheddar, which can be kept frozen for years, and other cheeses such as feta, which can be stored for only a couple of months, are just the tip of a surplus of U.S. agricultural products that is swamping markets for grains, meat and milk.
Supplies of cheese, meat and poultry started building as farmers decided to expand their herds and flocks two years ago when prices were high and export markets were hot. Abundant stockpiles of grain made it less risky by pushing down feed costs. But the steady climb in the dollar has deterred major foreign buyers, causing supplies to back up in the U.S. just as production is surging to records. That is sending prices for many goods to their lowest levels in years.”
In the “Comments” section one person said:
“Beef prices will be declining sooner than you think. The beef industry was decimated 5 years ago by the drought and explosion of corn and soybean prices. Feed yards were emptied as the cost of forage and concentrates erased profits and generated red ink. Brood cows were shipped to market and calving rates plummeted. But the beef cycle takes about 5 years to rebound and the herd has been building and more feeder calves are being placed. Much lower feed costs will return profitability to the industry….feed input costs are less than half of what they were 5 years ago.”
http://www.wsj.com/articles/a-cheese-glut-is-overtaking-america-1463477403
And if you look at the historical price of corn – wow! “Historically, Corn reached an all time high of 849 in August of 2012 and a record low of 22.90 in November of 1932.” Today it is at 304.50.
http://www.tradingeconomics.com/commodity/corn
Prices should be coming down. Plus, Europe can’t export to Russia, so they’ve been having to find other markets to sell to as well.
Massive food inflation hidden by changes in unit – that is, coffee, sugar, flour are no longer sold by the pound.
Bleach is no longer sold by the gallon.
Cereal packages no longer contain the weight they used to.
Trader Joe’s now sells roses by the 9, instead of by the dozen.
In all cases the “new” price is the same or higher than the historically accepted unit quantity price.
what I have noticed is the following. Supermarket chains closing hundreds of stores and some with hundreds of stores going bankrupt such as Pathmark Superfresh on the east coast, and a couple on the west and southwest coast with around 150 or more stores going under. Chains such as Food lion have been selling unprofitable ones. Giant is closing some here in the east coast. MARS in Maryland with 13 just went out of business last month. Kroger is quietly closing some. The oldest supermarket in Charleston S C, the Bi Lo is closing in October. The count of supermarkets due to profit margins being squeezed closing in the past year must be well over 1,000 and growing every week now
prices for basic commodities ( milk, potatoes, rice, basic veggies, flour ) have been stable for a decade.
prices for packaged foods has increased big time
my observation
Yep that darn ole bacon is up!!! All depends on the type you buy. I have seen the price fall here but the contents is lower. Beef for the shopper still remains high, although it is lower at the auction houses. My brother in law has a cattle ranch and he is complaining this year. LOL 2014 and most of 2015 he was racking in the bucks. Chicken seems to remain the same here in Arkansas.
Yes I do have a spare Refer/Freezer in the garage. Some complain about electricity usage but the money you will save will more then pay for itself. Just buy a used refer with a freezer and you and your family will be set.
The key to saving money on meat products is to buy in bulk. The wife and I love our rib eyes and NY strips and once every two months or so we look for the bulk sales in the local grocery store and buy a slab of each. Yes they cost about 100 bucks a slab, but once sliced they yield about 20 steaks at 3/4 of an inch. Our grocery cuts them for free although we do tip our butcher. The rib eyes end up at about 3.99 lb. strips about 3.00. Better yet go to a butcher shop they always have bulk packages.
You like smoked meat, buy an orion smoker and smoke your own meat. I have had smokers as large as one on a trailer, an oklahoma joe, and the Orion seems to do the best as you light the charcoal and it cooks using convection and wood chips and the meat is excellent. Actually a good smoker for the urban environment and it only costs 150.00. Go look it up.
Pull the pork and freeze it in serving sizes.
Yes, milk and pork down, haven’t really noticed other food prices down.
If you want to stretch your food budget avoid “organic” like the plague, supermarkets are expanding and putting organic sections in high traffic areas because they’re hugely profitable.
Operating and amortization costs of a big home freezer are about $120/year, thats your hurdle for saving by buying sales items.
I love bacon,the smell and taste are heavenly, however, from a health aspect it might be the worst foor known to man, nothing but salt and fat with nitrosamines thrown in as a kicker. You’re probably better off having a cigarette with your morning coffee and eggs.
Short term swings in food prices aside…
Looking at the price of food in $$ only is not the best way to do it. Instead, compare what the average % of a person’s take-home pay is spent on food. Or how many hours does a person work to pay the food bill.
Compared to when I was a kid and especially to when my parents were children, food has gotten a lot less expensive. This is in a large part due to industrial farming (chicken used to be expensive.. which is why FDR promised a “chicken in every pot”) and due to low margin retailing (i.e. Costco).
As bad as government price controls are today, they were far worse in the past. I remember my Mom buying margarine only because butter was ‘so expensive’ due to the price support (you had state level price controls back then also… i.e. the Northeast Dairy Compact). Today, my wife and I buy butter in bulk from Costco and freeze it. I can’t remember the last time I bought margarine.
Genetic engineering of crops is also raising yields and reducing costs. Unfortunately, people panic over “frankenfoods” which has limited development to mostly mass crops like corn.
The GMO salmon that could revolutionize salmon farming:
Fish grow twice as fast and do well in on land tanks (no pollution, no need for antibiotics like you do with sea based pens) and reduce the amount of fish meal needed. However, the salmon was stuck in FDA approval limbo from 1994 until recently. The cost of the delay pretty much killed research into improving other animal food sources.
So instead, an older, less efficient system of mutating seeds (normally via radiation) to develop new crops (seedless watermelon was developed this way). This is genetic engineering via a radioactive sledgehammer. Less efficient, but no lengthy and expensive government approval process to bring new foodstuff to market.
Farmed salmon does not have the nutritional value of ocean salmon. I won’t buy it. The last I looked Costco was selling farmed salmon for $7.99 Lb. I can buy whole fresh ocean salmon with the head attached at the ethnic (Asian) markets for about $3.25-$3.50 a pound.
No contest.
Question: How can the independent ethnic markets sell fish at a huge discount compared to the American chain supermarkets that move huge quantities of food?
If it is Atlantic salmon you are buying whole, it is probably farmed. There is very little wild Atlantic salmon in the market. The fish that are labeled “wild” are in many cases are also farmed.
To ensure you get wild caught, you would have to buy Sockeye (best I know.. still isn’t farmed) or some other non farm specie. These are not always available and can be ungodly expensive (though I have seen it cheaper than farmed once in a supermarket in Vermont).
As for the price difference: The Costco salmon is fillets is all meat. When you buy whole fish, you are buying bones, fins, skin, with the meat. I can get whole farmed Atlantic Salmon at the price you stated, but when you take in account the weight difference, it isn’t that much of a bargain compared to getting a bag full of fillets. I like the convenience of the fillets.
Let food be thy medicine.
I can’t be good all day but I at least start with a good breakfast. Commercial cereals are expensive and have unnecessary sugar and salt.
Do yourself a favor and make home health cereal using steel cut oats, buckwheat, milled flax and walnuts and dried fruit, like raisins. You’ll get a low cost meal that has a great profile of vitamins and minerals that will improve your blood pressure, cholesterol and blood sugar. I microwave a week size batch and then reheat a daily batch.
Have a daily yogurt or kefir (and coffee is actually healthy, loads of antioxidants and wards off nasties like Alzheimers, MS and Parkinsons).
Coffee and other foods grown in the mountains tend to contain a lot of heavy metals. It’s in the soil. So don’t drink too much or eat too much chocolate either.
“Commercial cereals are expensive and have unnecessary sugar and salt.”
What cereal are you eating? My shredded wheat has no added ingredients.
I spoke to everybody I knew her in twin cities no one thinks there has been any price drop of substantive value. Not eggs dairy or meat bread etc nota thing. Why would anybody believe anything Gotham comes out of wsj, Bloomberg? They Lie like a dirty rug.
Sent from my iPhone
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There has been considerable price deflation in the past year in meats – and dairy and egg. Prepared things like yogurt, etc., no. Aldi is starting to have a huge impact with its quality private label – chains are losing customers and are lowering their prices to compete – but still not.
Note the difference between Aldi and chains like Kroger – Kroger carries six different brands, three different sizes of lots of things – Aldi carries one in one size. Aldi store, 10’000 sq.ft., Kroger, 100’000. Aldi, five to six employees, Kroger, 25 and more. Aldi sales per sq.ft., $1’500, Kroger, $450.
All Aldi needs to do is add gas pumps – well, not really.
I wonder if that woman in California pays attention to the “deflation “ of content of what she purchases…. i.e. a “pound “ of coffee now 11-13 ounces ,half -gallon of ice cream , now quart and a half… the 6 ounce container of yogurt 5.3 ounces and so on and so on…
love your polls ! Ellen S. Hoyt >
Deflation? CR*P! Lower bill at cash register is likely due to changed packaging. I don’t buy a lot of meat so I can’t speak to pork or beef prices but things I do buy are more expensive. My favorite dry cereal just recently dropped from a 14oz box to a 12oz for the same price. It is almost impossible to buy a 16oz pack of pasta but the prices are the same as before.
Cheezits used to be my crack … at least a pound box a week.
I watched the “pound” box steadily shrink over the years (while price remained the same). About 3 or 4 years ago it went from 13.7 ounces to 12.4 ounces. Enough!
I quit cold turkey. In the interim I can count on 1 hand the number of boxes I’ve bought (and only because on sale + coupon).
I freeze fish and meat in water in Ziplock freezer bags. This prevents freezer burn and lasts for years, not months.
Downside: a) it takes longer to freeze and b) takes up more room in the freezer and c) turn over when it gels before freezing solid so it’s completely surrounded by ice when frozen otherwise any exposure to air will cause freezer burn.
I’ve noticed the price of pizza is going down. All the major franchises are trying to outdo each other. $7.99 large 3 topping at Dominos or 50% off at Papa Johns. I’m guessing cheese is by far the most expensive ingredient so maybe low cheese prices has to do with this.
The stuff I buy has stayed relatively flat. Produce prices change day to day and I buy what’s cheap at the time. For example, I’ll substitute blueberries for strawberries if strawberries are on sale. I rarely buy bulk meat as I try to eat very little of it.
The stuff I buy has stayed relatively flat.
Pizzas are pretty flat
Mish,
We have a separate freezer and buy way more than two weeks in advance too when we see a great sale. But like you, we’re lucky. We can afford to do that and aren’t living paycheck to paycheck.
“Deflation is a godsend for consumers,” said Bob Goldin, vice chairman of food consultancy Technomic Inc.
but but … the Federal Reserve WANTS inflation …
it is almost like the Federal Reserve on the side of banks and rich asset holders rather than Main Street …
“A Cheese Glut is Overtaking America” – Wall Street Journal – May, 2016:
“America has built up a glut of cheese so big that every person in the country would need to eat an extra 3 pounds this year to work it off.
And it isn’t just cheese. The growing stacks of cheddar, which can be kept frozen for years, and other cheeses such as feta, which can be stored for only a couple of months, are just the tip of a surplus of U.S. agricultural products that is swamping markets for grains, meat and milk.
Supplies of cheese, meat and poultry started building as farmers decided to expand their herds and flocks two years ago when prices were high and export markets were hot. Abundant stockpiles of grain made it less risky by pushing down feed costs. But the steady climb in the dollar has deterred major foreign buyers, causing supplies to back up in the U.S. just as production is surging to records. That is sending prices for many goods to their lowest levels in years.”
In the “Comments” section one person said:
“Beef prices will be declining sooner than you think. The beef industry was decimated 5 years ago by the drought and explosion of corn and soybean prices. Feed yards were emptied as the cost of forage and concentrates erased profits and generated red ink. Brood cows were shipped to market and calving rates plummeted. But the beef cycle takes about 5 years to rebound and the herd has been building and more feeder calves are being placed. Much lower feed costs will return profitability to the industry….feed input costs are less than half of what they were 5 years ago.”
http://www.wsj.com/articles/a-cheese-glut-is-overtaking-america-1463477403
And if you look at the historical price of corn – wow! “Historically, Corn reached an all time high of 849 in August of 2012 and a record low of 22.90 in November of 1932.” Today it is at 304.50.
http://www.tradingeconomics.com/commodity/corn
Prices should be coming down. Plus, Europe can’t export to Russia, so they’ve been having to find other markets to sell to as well. Developing countries aren’t buying as much because of U.S. dollar and Euro too high.
Adjusted for inflation (via US CPI, FWIW), the “low” of $22.90 in 1932 would equate to $402 today. So corn is actually cheaper today than during the Depression!
There’s a glut of cheese. In order to keep the price up, the U.S. government buys the surplus. Is there anything they don’t have their hand in? “Hey, I know, let’s keep prices UP. That’ll help the consumers.” WTF?
Good WSJ article re the glut. One commenter said that beef prices went up because of the drought and the prices of corn and soy in 2012, which necessitated sending cows to market. It takes about five years to get the herd back up to size.
http://blogs.wsj.com/moneybeat/2016/05/17/lets-brie-honest-the-entire-world-is-awash-in-cheese/
Corn was almost triple the price in 2012 to what it is now, plus oil prices are down. That should help bring prices down.
“Historically, Corn reached an all time high of 849 in August of 2012 and a record low of 22.90 in November of 1932.”
http://www.tradingeconomics.com/commodity/corn
I do most of the food shopping in my household. We generally try to eat healthy. I haven’t noticed significant increases or decreases in prices over the long term. A few years ago beef prices jumped due to drought in the West. And a couple of years ago chicken and pork went up due to mass die-offs from viral infections. But those prices have returned to normal.
We eat out once a week (3 in the household) and my total food expenditures run around 6% of my take home pay. And that’s the most expensive thing I spend money on. So it is remarkably affordable.
The government started supporting food prices during the Great Depression to help farmers. Food prices used to go through boom/bust cycles and farmers would lose their farms to the banks during the busts when they couldn’t meet their mortgage payments.
There aren’t a lot of small farmers anymore and with futures markets, I don’t see the government needing to provide this service anymore. But once you start something in government, it is very, very hard to ever get rid of it.
Right, let’s let the banksters use their handy bag o’ tricks with our food supply just like they have with our housing supply. What could possibly go wrong?
In the early 1970s when you had people like Nixon and Ford in the White House SeeBS Evening News with Walter Krankheit would do monthly visit to supermarkets to record real food prices. I wonder if anyone has done that for the last seven years.
But you can always eat an ipad
Venison and self-caught local fish in glacial lakes beats ALL of your supermarket stuff 🙂
The answer is yes because everything else such as housing and health insurance is going up.
When you have wage stagnation, you’re lucky this ain’t going up or else you’re gonna have a true revolution.
For the past month I have been seeing milk (whole) for $1.60/gal. Eggs at $0.88/doz.
Not hard to find boneless chicken breasts for $1.99/lb. Bacon is still high. Last year at this time Costco was selling 4 lb packs for around $10. Stocked up then, but starting to run out.
But pricing is also pretty regional. Transportation costs play a big role and lower oil helps.
Don’t really track vegetables as we garden (maybe not as cost efficient, but tastes better) or buy from some developed local sources.
Beef still seems high, but we typically buy a quarter steer from a neighbor and then fill in with sales throughout the year.
So in general, food does not seem too bad. Medical and auto insurance more than offset it, though.
Bacon prices are rising…and you can thank Wendy’s, McDonald, Burger King, etc for that…demand for QSR sandwich bacon has exploded. Since a pig only has one pork belly (from which we get bacon) this disconnect in the relative demand drives bacon up and other parts down. We see the same thing in chicken as Americans like (chicken) breasts so we depended on Russia and others to help take all the “extra” dark meat. Animals unfortunately come as a mixed set of parts…until they develop “test tube bacon”. 🙂
The idea that someone can notice a $20 change in their grocery bill is silly. Who buys exactly the same items every time?
My impression is that steaks are down some, Ribeyes were near $17/lb and are maybe $13 now. But still quite a bit higher than before the crash when $8 was the regular price here (beef producting area).