Inflation

It’s a little ironic that after grumbling all the way home regarding the amount of strategery is required to stay within our food budget, I encounter this article in the Boston Globe:

After nearly two decades of low food inflation, prices for staples such as bread, milk, eggs, and flour are rising sharply, surging in the past year at double-digit rates, according to the Labor Department. Milk prices, for example, increased 26 percent over the year. Egg prices jumped 40 percent.

Escalating food costs could present a greater problem than soaring oil prices for the national economy because the average household spends three times as much for food as for gasoline. Food accounts for about 13 percent of household spending compared with about 4 percent for gas.

Rising food prices can be particularly corrosive to consumer confidence because people are so frequently exposed to the cost increases. “It’s the biggest risk we face economically, and it might be the thing that does us in,” said Rich Yamarone, director of economic research at Argus Research Corp. in New York. “There’s nothing really worse than having a job, making money, and forking most of it over just so you can have the same amount of food. You’re running in place, and it really weighs on you.”

From the Daily Mail:

The central bank of the southern African country has a issued a 10million Zimbabwe dollar note. The move increases the denomination of the nation’s highest bank note more than tenfold.

Even so, a hamburger in an ordinary cafe in Zimbabwe costs 15 million Zimbabwe dollars.[...]

The new 10 million note is the equivalent of about £2 at the dominant black market exchange rate. A hamburger at an ordinary cafe costs about 15 million Zimbabwe dollars (£3).[...]

Zimbabwe faces the world’s highest official inflation of an estimated 25,000 per cent. Independent financial institutions say real inflation is closer to 150,000 per cent.

Hopefully the cabal in the U.S. won’t take that as a challenge when considering the relative weakness in the U.S. dollar.

However, I hear that Regis is thinking about an inexpensive sequel to his former prime-time game show:  “Who Wants to be a Billionaire?”

Two news items from the past week caught my eye as being somewhat inconsistent with one another.

First, we have a wire service story on increasing pressure on the lower rungs of the economy:

Across the nation, Americans are increasingly unable to stretch their dollars to the next payday as they juggle higher rent, food and energy bills. It’s starting to affect middle-income working families as well as the poor, and has reached the point of affecting day-to-day calculations of merchants like Wal-Mart Stores Inc., 7-Eleven Inc. and Family Dollar Stores Inc.[...]

From Family Dollar to Wal-Mart, merchants have adjusted their product mix and pricing accordingly. Sales data show a marked and more prolonged drop in spending in the days before shoppers get their paychecks, when they buy only the barest essentials before splurging around payday.

Her husband’s check from his job at a grocery store used to last four days. “Now, it lasts only two,” she said.

To make up the difference, Grassia buys one gallon of milk a week instead of three. She sometimes skips breakfast and lunch to make sure there’s enough food for her children. She cooks with a hot plate because gas is too expensive. And she depends more than ever on the bags of free vegetables and powdered milk from a local food pantry.[...]

Industry analysts and some economists fear the strain will get worse as people are hit with higher home heating bills this winter and mortgage rates go up.

Meanwhile the Social Security administration has announced the cost of living adjustments for Social Security checks for 2008. Via the Indianapolis Star:

With essentials such as food, gasoline and medical care rising at a faster clip, an extra $24 a month likely won’t go very far. But that is the boost the typical retiree will see in Social Security checks come January.

The 2.3 percent cost-of-living adjustment is the smallest in four years, even though many prices are rising more quickly this year.

Admittedly, the COLA calculation can be blamed on some of the arcana surrounding the SSA’s magic formula…but still, doesn’t the conjunction of the two news stories seem just a little…bad?