Brace for Inflation, Despite What TV Economists Declare
Forbes reported yesterday that Safeway is responding to higher costs by passing them along to consumers in higher food prices. One would expect a chain with 1,300 locations to not make this move lightly, rather we should expect others to follow suit.
According to the Forbes article, “the USDA expects the food, food-at-home and food-away-from-home CPIs to increase 2.5 to 3.5 percent over 2013 levels. And this is based on the assumption of normal weather conditions and normal weather has hardly been the norm.”
At the same time, the Wall Street Journal recently reported “Commodity Investors Brace for El Niño“, referring to the weather pattern in the Pacific region that can bring adverse growing conditions to much of the American heartland.
And Archer Daniels Midland, one of the world’s largest agricultural middlemen and processor, announced its first quarter earnings fell, citing other adverse conditions.
So the US Government predicts up to a 3.5% inflation rate on food with normal weather, but bad growing conditions are forecast and we’ve already seen indications that two major players will increases prices over last year’s 1.4% even before the summer growing season.
But somehow the financial talking heads will try to explain that inflation is truly low. The problem is, they aren’t looking at it from the perspective of an average family buying groceries on a weekly basis. Ask anyone who does the family shopping and they will tell you that food prices are more than a little higher now than they were last year.