The food index increased 1.5 percent in April following a 0.3-percent increase in March. The food at home index increased sharply in April, rising 2.6 percent. The increase was broad-based, with all six major grocery store food groups increasing at least 1.5 percent over the month.
The index for meats, poultry, fish, and eggs increased the most, rising 4.3 percent as the index for eggs increased 16.1 percent. The index for cereals and bakery products rose 2.9 percent in April, its largest monthly increase ever. The index for nonalcoholic beverages also rose 2.9 percent in April, its fourth consecutive increase. The indexes for dairy and related products and for fruits and vegetables both increased 1.5 percent in April.
The index for food away from home rose 0.1 percent in April after rising 0.2 percent in March. The index for limited service meals rose 0.7 percent, while the index for full service meals declined 0.3 percent.
That monthly increase puts the US on pace to see a 20% increase in food prices over the next year. The consensus is to dismiss that extrapolation as doomerist nonsense. I guess I’m a doomerist.
To repeat: Consumer price increases are coming. The total CPI declined because travel, lodging, and oil prices are all down. But the price of something no one wants may as well be infinity. The CPI ostensibly aims to measure core prices. That means measuring prices of things that everyone consumes. Right now people aren’t driving, flying, or staying at hotels. When they start doing so, those prices are going up, too.
Hospitality margins are thin in good times. The combination of consumer apprehension, temperature checks, restrictions on maximum occupancy, and the like are all additional costs that didn’t exist three months ago. To overcome these, prices are going to have to go up–on top of increasing costs for goods sold. Restaurants desperate to welcome back customers will offer cheap prices as long as their PPP subsidies allow but then they’ll shoot up (or the place will fold).
Before things are able to be consumed they must be produced. Domestic production in consumer goods is down more than consumption is. A similar story is playing out all over the world. Exporting countries like Germany and China are going to see more of their production consumed domestically, leaving less for export. That means less for us.
Many people dismissively mocking those concerned about the real wound coronavirus gave Snowden say the only people worried about the downturn are greedy stock market fat cats. I don’t have any investment assets like that, so what do I care if muh economy crashes?
When your grocery bill doubles, you’ll have your answer.