A 34% discrepancy in food inflation reporting between U.S. Government Agencies!

Discussion in 'Wall St. News' started by ByLoSellHi, Jun 7, 2007.

  1. What? Inflation?

    Posted on Jun 7th, 2007


    Barry Ritholtz submits:
    Okay, so here's the "Official" explanation: the selloff over the past few days is courtesy of this new-fangled discovery called INFLATION. That's why rates have ticked higher.

    You see, we have been living in a benign non-inflationary environment, and just yesterday, it seems that some traders have discovered that -- WTF?! -- prices of goods and services are rising.

    Of course, many pundits, traders and investors -- and a goodly part of the Federal Reserve -- have convinced themselves that there really wasn't any inflation, so long as we wear blinders and ignore those pesky goods and services like Food and Energy. You know, those annoying items utterly necessary for survival.

    That's been the f@#ktard explanation, anyway. If you believe it, though, you must be living in a cave -- which given the market for bat guano and stalagmites, probably has achieved the elusive Fed goal of price stability.

    Bill King notes that:

    For April 2007, the monthly food cost is $1044.80 for average family of four, per the USDA.

    For April 2006, the monthly food cost is $995.40 for average family of four. Ergo y/y food inflation is 4.963% according to the USDA.

    The BLS has ‘food’ inflation (urban) at only 3.7% y/y (unadjusted) for April 2007. Ergo, there is a 34% discrepancy in food inflation reporting between U.S. Government Agencies – the USDA and BLS.

    This story from May 24, 2007 went largely unnoticed: Reuters reports, “The Federal Reserve's adherence to core inflation, which strips out food and energy prices, is taxing the public's patience and risks credibility, a senior U.S. central banker said on Thursday.

    ‘In the United States over the last 20 years, core measures excluding food and energy did take out a lot of noise. But in the last three years it has been extracting quite a bit of signal,’ said Harvey Rosenblum, head of research at the Federal Reserve Bank of Dallas.”

    Meanwhile, the rest of the world continues to raise their interest rates to fight inflation.


    The Chicago Sun-Times was kind enough to include this table of food price increases:


    Here's a sampling of where food prices are heading across the nation:
    National average prices April 2007 April 2002 April 1997
    White bread (pound) $1.20 $1.00 $.86
    Ground beef (pound) $2.25 $1.78 $1.38
    Bacon (pound) $3.50 $3.26 $2.66
    Whole chicken (pound) $1.12 $1.11 $1.00
    Eggs (dozen) $1.62 $1.05 $1.08
    Milk (gallon) $3.14 $2.78 $2.61
    Butter (pound) $2.86 $3.20 $2.18
    Ice cream (half gallon) $3.79 $3.72 $2.90
    Red delicious apples (pound) $1.10 $.91 $.90
    Bananas (pound) $.52 $.50 $.52
    Navel oranges (pound) $1.24 $.75 $.60
    Iceberg lettuce (pound) $.99 $1.15 $.67
    Tomatoes (pound) $1.63 $1.32 $1.35
    Frozen orange juice (12 oz.) $2.52 $1.89 $1.73
    Sugar (pound) $.51 $.44 $.44
    Peanut butter (pound) $1.75 $1.98 $1.81
    Coffee, ground roast (pound) $3.44 $2.98 $3.89
    Potato chips (16 oz.) $3.48 $3.29 $3.18

    Source: U.S. Department of Labor, Bureau of Labor Statistics
  2. Food prices have gone up? I stopped eating a few years ago when it got a little pricey...haven't looked back since. Me and the government run on nothing but free market fueled energy.

    The next Fed meeting will have a different tone and the markets will not like it.
  3. I've been laughing at the "no inflation" mantra for a long time now. Working for a consumer goods company (my job), we've taken price increases on our products (food) for the last three years, equivilant of approximately 10% a year. And I KNOW we're not the only ones doing it.

    When I worked for Reckitt on Lysol (which isn't a food product) we took 5-12% increases during my tenure there. Coca Cola? 5% increases. Every FMCG company takes at least one hike a year to keep profitable.
  4. It is amazing when two separate U.S. government agencies report a 34% discrepancy in something as basic as food inflation.

    And a little scary.
  5. empee


    what this is telling u as that Bush needs to change the food pyramid to only include lettuce and peanut butter.

    More lettuce and Peanut Butter is the solution!

    (and less of everything else).

    WHIP (Whip inflation now), eat more peanut butter!
  6. Every aspect of Federal Government is about its own enhancement... regardless of how much they must cheat and lie to the people.

    They deserve a swift kick in the balls from every American followed by imprisonment... at a minimum.
  7. S2007S


    food and energy dont count....

    :p :p :p :p :p :p :p
  8. Don't eat, drive, or heat or cool your house.:p
  9. Sounds like you're asking me to be Nicole Ritchie or Paris Hilton! :D
  10. Food is expensive and has been growing for 2 years. So has inflation.
    #10     Jun 7, 2007