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Prices at the supermarket keep rising. So do corporate profits

89 points by ctoth 4y ago

Retric 4y ago
Talk about a low effort post, many of the numbers used to support the narrative didn’t keep up with inflation. I can’t tell if this post was by the mathematically innumerate or just crafted for the innumerate. For example: “$238 billion, according to a recent Oxfam report, and their wealth increased by $8.8 billion between 2020 and 2022” 208 Billion in 2020 is worth ~238 billion in 2022, so they effectively down ~20 billion. Exact numbers depend on when in 2020 and 2022 their wealth was calculated, but it’s very clear they lost wealth. Some of these numbers do support their argument but many directly contradict it.
- ceejayoz 4y ago
  The article cites lots of specific numbers that are well in excess of the 10% inflation we've seen. It also cites increasing margins.
  - bravo22 4y ago
    You can increase your margins by double digits and still account for a small fraction of the overall increase. The determining factor is net profit of the grocery industry which is usually 3-5%. If you eliminated that entirely it still wouldn't put a dent in food inflation.
  - Jensson 4y ago
    10% inflation is average, many things will inflate a lot more, but people don't post about stuff that was inflated less.
  - Retric 4y ago
    If your margins are 4% and they increase by 16% that’s increasing prices by 0.64%. These are competitive industries with sub 5% profit margins being quite common. The simple reality is when companies hedge uncertainty they raise prices a little further than they expect their costs to rise. This is counterproductive when people buy less of their products, but staple food is a rather inelastic market.
    - ceejayoz 4y ago
      They're not all that low. Tyson's cited in the article: https://www.reuters.com/business/retail-consumer/tyson-foods-beats-revenue-estimates-higher-meat-prices-2022-02-07/ https://www.reuters.com/business/retail-consumer/tyson-foods... > The average price for Tyson's beef surged 31.7% in the quarter ended on Jan. 1, while the unit's operating margins jumped to 19.1% from 13.2% a year ago. Average prices for all of Tyson's products climbed by 19.6%.
      - Retric 4y ago
        I said common not constant, one unit in one company did that well very briefly but overall that’s not abnormal. Some divisions have better quarters than others, and which is on top changes over time. Tyson’s net quarterly profits peaked at 7.9% 3/2022, but it was also 7.4% in 2018. https://www.macrotrends.net/stocks/charts/TSN/tyson-foods/profit-margins https://www.macrotrends.net/stocks/charts/TSN/tyson-foods/pr... And if you look at their most recent numbers, net profits were 4.5% all of which is very favorable compared to 1.5% in 2012. Overall the tendency is at or below 5%.
- aleksandrm 4y ago
  [flagged]
- paxys 4y ago
  Grocery prices aren't "keeping up" with high inflation they are causing high inflation.
  - daze42 4y ago
    How could grocery stores (and food supply chains) cause inflation?
    - sokoloff 4y ago
      They’re part of the basket of goods that is measured when stating the official inflation figures.
      - daze42 4y ago
        Ah, so you're talking about CPI. Then in that case I agree. It's not clear that CPI == inflation, though.
        dclowd9901 4y ago
        In the general case, CPI is how they measure inflation.
        sokoloff 4y ago
        Things getting more expensive than they used to be is inflation. I can’t see any way that grocery stores raising prices doesn’t “cause inflation”. The act of raising prices is quite literally what causes inflation. (Having currency that devalues is a reason for vendors to demand higher nominal prices, but it’s two sides of the same coin whether the currency is worth less or the goods have a higher price.)
        daze42 4y ago
        Things in general across the board getting more expensive is a symptom of inflation, true. But I don't see how just a subset of businesses raising prices necessarily causes long term inflation. Even if all the existing grocery stores collude to raise prices together, that would just create market pressure for other grocery stores to pop up that can undercut and obtain a large amount of market share from the colluding businesses. So sure, there may be a blip of "inflation" while the market corrects and the new businesses start up, but overall it shouldn't cause actual inflation.
- Eumenes 4y ago
  [flagged]
- ctoth 4y ago
  I submitted this post, and so I suppose that would make me "mathematically innumerate" (which seems a bit like calling someone literately dyslexic.) I submitted it because I noticed that my grocery prices were vastly higher over the last year than the 10% quoted inflation would seem to predict and thought it would be interesting to see what this community thinks. Most of us are shielded from stuff like this, and so also I thought it would be useful to inject a little everyman perspective into our tech bubble :)
  - Kiro 4y ago
    The quoted 10% is a mean and doesn't imply that all prices are affected evenly.
  - lend000 4y ago
    CPI is also a broken measure due to its inability to measure wealth inequality (sampling median purchasers only) and discretionary hedonic adjustments. Real inflation has likely been ~33% higher than reported for decades (the Big Mac index is probably the true gold standard).
    - gruez 4y ago
      >CPI is also a broken measure due to its inability to measure wealth inequality (sampling median purchasers only) And that's fine, because the CPI's job is to measure how prices have changed (ie. inflation), not wealth inequality. Just because a given metric doesn't support your pet cause doesn't mean it's "broken". It's like complaining GDP is a broken metric because it doesn't measure how oppressed minorities are. > Real inflation has likely been ~33% higher than reported for decades (the Big Mac index is probably the true gold standard). I tried to confirm this and the results were far from conclusive. The big mac index data can be obtained from github[1] and gives a 129.9% increase between april 2000 (earliest data available) and july 2022 (latest data available). To compare this against the CPI data, I checked on FRED and the "Consumer Price Index for All Urban Consumers: Food Away from Home in U.S. City Average"[2] component of the CPI gives a 87.0% for the same time period. If you take those numbers and convert them to annualized rates, you will indeed find a 33.3% difference between them. Looks like your claim is confirmed, right? But not so fast. The CPI category listed above actually breaks down into more detailed categories, including "Limited service meals and snacks", which presumably the big mac falls into. That data isn't available on FRED but can be found on BLS's data viewer[3] and gives you a 105.8% increase for the same time period. If you convert that to an annualized rate the difference between that and the big mac index drops to 15%. I suspect if we try harder we can eliminate more of the discrepancy. For instance, the "Limited service meals and snacks" index was probably computed from a basket of items, not just big macs. Items that have fatter margins (eg. fries or drinks) might have inflated slower than big macs, thereby dragging the growth of the basket down and explaining the difference. [1] https://github.com/TheEconomist/big-mac-data/ https://github.com/TheEconomist/big-mac-data/ [2] https://fred.stlouisfed.org/series/CUSR0000SEFV https://fred.stlouisfed.org/series/CUSR0000SEFV [3] https://beta.bls.gov/dataViewer/view https://beta.bls.gov/dataViewer/view
- flandish 4y ago
  Correcting numbers is one thing but your post reads like it’s trying to say OP wasn’t good enough so the point is invalid. Let me state it clearer: For industry directly related to life, health, safety, shelter, food, and education, profit is theft via gouged prices mixed with stolen wage. Any amount. No “numbers” needed. This kind of stuff should be nationalized. Especially if the US is as “strong” and smart a nation as we claim we are.
ImHereToVote 4y ago
[flagged]
giuliomagnifico 4y ago
> Food companies can raise prices. Consumers can’t do much about it. Yes, we can avoid to buy those products, but the issue is, like the article says, the monopoly. If all the products are made by the same company/ies, only with different sub-brands, then the politics and magistrates should take a look into it.
- programmertote 4y ago
  Monopoly increases the risk of greed-fueled inflation for sure. I am of the opinion that the inflation that we are seeing now started off with fundamental issues with the economy (oil production and prices; COVID-related government programs; too many years of cheap money provided by the government), but it sticks around because of greed. I have been consciously trying to cut down on the expenditure on snacks, food (like eggs) and other items like laundry detergent that obviously have gone up significantly in price (more so than inflation rate) and/or have been shrinkflating noticeably. It is not easy, but that's the best I can do to send a message (I know, me doing alone is inconsequential) to some of these producers that they have a limit on how much they can raise. I am also 100% aware that a lot of people (esp. the ones with families) don't have the luxury to reduce consumption like myself though.
yieldcrv 4y ago
Its not either-or. Price gauging versus stimulus. Corporations wouldn't have these profits if people didn't have excess cash to pay. The entire plan for the fight against inflation is "demand destruction", which is a euphemism for creating unemployed homeless peasant families that are intended to die under a tarp in Los Angeles. It means "run out of money and stop buying" with no plan for your survival. Corporations can try eek out higher earnings with any price, a different corporation or group of people will notice that there is a business model for undercutting it. Good for them, it has nothing to do with how fast or slow they can get into the market, and it won't matter for you if there is a disruption in your income and savings. But that's the reality.
trappist 4y ago
Production happens over time. Businesses pay for their inputs at one price level, do production things, then sell their final outputs at a higher price level, resulting in higher margins than would be possible under stable prices.
borissk 4y ago
There are just a few big companies left in many industrial sectors. Easy for them to reach an agreement to raise prices together. The people that run the two parties are not going to do anything about it (or let government administration do anything about it) until the people go out on the streets.
- dw_arthur 4y ago
  This is a huge part of the problem. In my large metro area there are two local grocery chains and they are known for squatting on properties to block competitors from coming in. Thankfully in recent years other grocery chains have slowly started opening stores.
- dclowd9901 4y ago
  Go out in the streets and do what? We’ve protested about everything. Nobody cares. And why would they? We’re not the ones who put them in the seat of power. It’s these same large corporations that do.
  - ilrwbwrkhv 4y ago
    Nah we haven't protested. The French are protesting. When you can see fire, that's when you know you're protesting. Marching with banners does fuck all.
    - AlexandrB 4y ago
      We had plenty of fires during BLM. Little changed.
      - ilrwbwrkhv 4y ago
        Nah those were quickly rejected by the BLM leadership as "not one of ours"
      - ahoy 4y ago
        In my city, we had a month of enormous BLM protests. The result was an increase police budget and less funding for schools and parks. I honestly don't see that kind of mostly peaceful mass protest as productive anymore.
FooBarBizBazz 4y ago
Even though supermarket prices have gone up, what's really gone up is prepared food, even at cheap places. You can almost feed yourself for a week for the cost of one visit to McDonald's.
- dw_arthur 4y ago
  I stopped eating out when the pandemic started and I can't remember the last time I had a meal out where I was satisfied with the price and quality.
  - sokoloff 4y ago
    In 2019, large cheese pizzas used to be $5 at our favorite pizza place. They’re $16 now. That caused us to find a new second-favorite pizza place, where a large cheese is also $16, but is at least better tasting. We can make an acceptable pizza at home for around $5, making that our new first-favorite pizza place.
- Espressosaurus 4y ago
  I buy mostly unprepared foods (raw meats, raw vegetables, coffee, milk, tofu, eggs, ...) and I've seen my grocery bill double in the last 5 years. Looking at random fast food places I go to, I've seen those prices nearly double as well. Pizza prices have nearly doubled to where a $20 pie is now close to $40.
- jimmygrapes 4y ago
  10 piece boneless wings at my nearest chain sports bar type restaurant now costs $16.99. They have specials on Wednesdays where you can buy 10 get 10 free (with beverage purchase). In 2022 it was $12.99 for the same. In 2021 and 2020 it was $8.99. In 2019 it was $6.99. All pre-tax and pre-tip, of course. Only four years difference, and I don't think chicken shortages were the cause.
- bob1029 4y ago
  > what's really gone up is prepared food, even at cheap places. My observation is that it has increased by the same rate on both sides, so DIY cooking has the same relative advantage. The absolute impact is simply larger now. My monthly grocery bill is right under $500 today - just for myself. But, this is very nearly 100% of my meals. I will eat out about 10-20 times a year. I think meal prep is pretty much mandatory if you want to enjoy quality food without spending 4 figures/m. I find time in the kitchen is fantastic for unwinding from work or filling dead time between tasks. I run 3 batches throughout the week, each usually good for 7 days. The system is sophisticated at this point with a "queue" in my freezer and color-coded containers. Right now, if I did absolutely no more cooking, I could enjoy high-quality meals for another week. Living with a reasonable buffer of food in your freezer will change how you do things. For me, the temptation to order a pizza is almost always negated when very tasty chicken-fried rice is only 3-5 minutes away and already paid for.
tempsy 4y ago
Personally a big change I’ve noticed about my own grocery shopping habits is that I spend more to get the high quality stuff. eg organic pasture raised eggs, grass fed beef, grass fed dairy, etc. There’s a lot more of this “premium” stuff than a few years ago. I suspect if it’s included in some average it will look like things are getting much more expensive when part of what’s happening is upscaling of a lot of items.
- borissk 4y ago
  So you're saying that grocery prices today are mostly the same as they were in 2019?
  - tempsy 4y ago
    no i didn’t say that, i just mean that if there’s upscaling happening in eggs, meat, dairy then averages will look higher than if that wasn’t happening it’s still going to be higher, but not necessarily as much as it’s being portrayed if you’re buying conventional stuff
    - borissk 4y ago
      Good for you and well done that you're able to afford to buy better stuff. But there's a big group of people that has a problem buying food now and didn't have that problem 5 years ago. I think on average probably the opposite of what you're suggesting is happening - people are buying cheaper goods, which to a small degree can mask the real price increase.
      - tempsy 4y ago
        the egg section looks completely different now than a few years ago. clearly there is a lot of new demand for $10/dozen organic pasture raised no corn or soy eggs. these are options that weren’t even available even a few years ago.
- carlosjobim 4y ago
  The "premium" stuff is what used to be average quality in the past, while the normal stuff has declined sharply in quality.
adamredwoods 4y ago
>> Grocery retailers, too, have become increasingly consolidated. The ongoing Kroger-Albertsons merger, which could be blocked by the FTC, for example, has raised alarm bells from consumer advocates; if the merger goes through, Kroger-Albertsons and Walmart together would control 70 percent of their industry. In fiscal year 2022, Kroger’s operating profit was $4.1 billion — in 2021, it was $3.5 billion. Since the pandemic began, Kroger has paid billions in dividends to its shareholders. This part is key to me. The larger the consolidation, the more they answer to stockholders, and not to customers or competition. Stockholders only care about stock price [1]. There's no value in caring for the consumer class. [1] https://bts.com/2017/11/01/who-do-you-put-first-the-stakeholder-you-choose-defines-your-company-culture/ https://bts.com/2017/11/01/who-do-you-put-first-the-stakehol...
deleted 4y ago
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WalterBright 4y ago
> Once companies raise prices, they don’t tend to lower them even if input costs go down. Pump prices for gas go up and down on a daily basis. > Since the pandemic began, Kroger has paid billions in dividends to its shareholders. Kroger stock is up 23.5% over the last 5 years. For comparison, the S&P 500 has gone up 51% over the last 5 years. The article is a little short on a compelling argument.
- kcolford 4y ago
  You didn’t adjust for risk in your comparison. The s&p 500 has many companies in it that are far riskier than a grocery store chain. Now I can’t say for sure what the aggregate risk is, so you may still be on to something there. In this instance though you’re comparing apples to oranges.
  - WalterBright 4y ago
    > The s&p 500 has many companies in it that are far riskier Yes, "many" companies. But it's five hundred of the biggest companies, including Kroger. There's no way around it - KR is a significantly underperforming stock, and a lousy investment. If you think KR is a good investment, buy some shares in it. I'll pass, no thanks.
transfire 4y ago
What pisses me off even more is how the big companies force the little ones out of business whenever they have a successful product. They either buy them out and then proceed to ruin the produce, sue them out existence over bullshit, or they use their clout with grocers to not carry the items. This happened to cake mix a few years back for instance. Ironically it had an interesting backlash b/c now the cake mix section is tiny because there’s nothing left but crap and no one wants another stomach ache.
jmyeet 4y ago
Once again, the solution to high inflation isn't Fed monetary policy, it's taxation. Corporate profits windflal tax at a punitive rate and income distribution to those worst affected. Additionally taxes on resource extraction (eg oil and gas, mining) should permanently be high a la Norway.
- gruez 4y ago
  > Once again, the solution to high inflation isn't Fed monetary policy, it's taxation. Corporate profits windflal tax at a punitive rate and income distribution to those worst affected. That sounds like a great way to push companies to invest even less into disaster preparedness. Why bother pay extra money into supplying your supply chain for the next supply disruption, when you know that you'll get painted as profiteers by the government and slapped with a windfall tax? It's far better to run your business as lean as possible during the good times and extract all the money you can without the risk of being villanized.
  - jmyeet 4y ago
    You have it backwards. Companies aren't investing in their business in any way. They're simply funennling huge profits to shareholders in the forms of share buybacks. That's it. A high profit tax would actually encourage them to invest in their business. > It's far better to run your business as lean as possible during the good times and extract all the money you can without the risk of being villanized. Wow. This is textbook capitalist propaganda. "Villainized"? When profiteering is responsible for the majority of inflation, you should be villainized. You shouldn't necessarily be expected to do the right thing altruistically. That's what the windfall profits tax is for.
    - gruez 4y ago
      >Companies aren't investing in their business in any way. They're simply funennling huge profits to shareholders in the forms of share buybacks. That's it. >A high profit tax would actually encourage them to invest in their business. Time is a factor here. Just because you made $10M in excess profits this year because of avian flu, doesn't mean it makes sense to dump all of that into chicken farm in the same year. Even if we ignore the time factor, we have to consider that there might be better uses of the money, for instance shoring up investment in other sectors like semiconductors. Returning money to shareholders allows this to happen. >Wow. This is textbook capitalist propaganda. "Villainized"? When profiteering is responsible for the majority of inflation, you should be villainized. You shouldn't necessarily be expected to do the right thing altruistically. That's what the windfall profits tax is for. And what you're saying is textbook Marxist propaganda, so can we skip the ad hominems and stay on topic? By this construction you'll always have a villain, because there's always going to be sectors that have higher inflation than normal. If your construction of a villain one to always exist by definition and without regard for actions or motivation, then I argue that your definition is seriously flawed. Also, you seemed to have missed the point in my previous comment entirely. Let me rephrase it with an example: Suppose we have two egg farmers, Alice and Bob. Alice tries to do The Right Thing by having proper biosecurity practices (eg. smaller/isolated hen houses, proper training for staff, frequent monitoring for infection). Bob on the other hand does the bare minimum and cuts corners where he can. During normal times, all the extra precautions costs Alice money and either makes her offerings less competitive or eats into her profits, and meanwhile Bob gets to rake in all the extra money. Now suppose the avian flu rolls around, and Bob's flock is decimated while Alice's flock is unscathed due to the investments she had in the years prior. The shortage combined with Alice's flock being unscathed allows her to charge make more profits during the disaster, and for her to recoup her losses in the years prior. However, because she's making extra profits, she gets branded as the villain for hiking practices for no good reason. She didn't even lose any hens! How dare she raise prices! Meanwhile Bob avoids all of this, and maybe is even able to play the victim card and get the government to bail him out. So much for incentivizing long term thinking.
balderdash 4y ago
My takeaway here though is that while I don’t condone the practice it also means that consumers are not willing to substitute/bargain shop. I’m pretty sure you could charge $25 for a dozen eggs at whole Foods and most shoppers wouldn’t think it’s worth their time to even try to comparison shop
- deleted 4y ago
  [deleted]
amai 4y ago
tldr; Capitalism is failing, because we have monopolies/oligopolies everywhere.

89 points by ctoth 4y ago

Talk about a low effort post, many of the numbers used to support the narrative didn’t keep up with inflation. I can’t tell if this post was by the mathematically innumerate or just crafted for the innumerate. For example: “$238 billion, according to a recent Oxfam report, and their wealth increased by $8.8 billion between 2020 and 2022” 208 Billion in 2020 is worth ~238 billion in 2022, so they effectively down ~20 billion. Exact numbers depend on when in 2020 and 2022 their wealth was calculated, but it’s very clear they lost wealth. Some of these numbers do support their argument but many directly contradict it.

ceejayoz 4y ago
The article cites lots of specific numbers that are well in excess of the 10% inflation we've seen. It also cites increasing margins.
- bravo22 4y ago
  You can increase your margins by double digits and still account for a small fraction of the overall increase. The determining factor is net profit of the grocery industry which is usually 3-5%. If you eliminated that entirely it still wouldn't put a dent in food inflation.
- Jensson 4y ago
  10% inflation is average, many things will inflate a lot more, but people don't post about stuff that was inflated less.
- Retric 4y ago
  If your margins are 4% and they increase by 16% that’s increasing prices by 0.64%. These are competitive industries with sub 5% profit margins being quite common. The simple reality is when companies hedge uncertainty they raise prices a little further than they expect their costs to rise. This is counterproductive when people buy less of their products, but staple food is a rather inelastic market.
  - ceejayoz 4y ago
    They're not all that low. Tyson's cited in the article: https://www.reuters.com/business/retail-consumer/tyson-foods-beats-revenue-estimates-higher-meat-prices-2022-02-07/ https://www.reuters.com/business/retail-consumer/tyson-foods... > The average price for Tyson's beef surged 31.7% in the quarter ended on Jan. 1, while the unit's operating margins jumped to 19.1% from 13.2% a year ago. Average prices for all of Tyson's products climbed by 19.6%.
    - Retric 4y ago
      I said common not constant, one unit in one company did that well very briefly but overall that’s not abnormal. Some divisions have better quarters than others, and which is on top changes over time. Tyson’s net quarterly profits peaked at 7.9% 3/2022, but it was also 7.4% in 2018. https://www.macrotrends.net/stocks/charts/TSN/tyson-foods/profit-margins https://www.macrotrends.net/stocks/charts/TSN/tyson-foods/pr... And if you look at their most recent numbers, net profits were 4.5% all of which is very favorable compared to 1.5% in 2012. Overall the tendency is at or below 5%.
aleksandrm 4y ago
[flagged]
paxys 4y ago
Grocery prices aren't "keeping up" with high inflation they are causing high inflation.
- daze42 4y ago
  How could grocery stores (and food supply chains) cause inflation?
  - sokoloff 4y ago
    They’re part of the basket of goods that is measured when stating the official inflation figures.
    - daze42 4y ago
      Ah, so you're talking about CPI. Then in that case I agree. It's not clear that CPI == inflation, though.
      - dclowd9901 4y ago
        In the general case, CPI is how they measure inflation.
      - sokoloff 4y ago
        Things getting more expensive than they used to be is inflation. I can’t see any way that grocery stores raising prices doesn’t “cause inflation”. The act of raising prices is quite literally what causes inflation. (Having currency that devalues is a reason for vendors to demand higher nominal prices, but it’s two sides of the same coin whether the currency is worth less or the goods have a higher price.)
        daze42 4y ago
        Things in general across the board getting more expensive is a symptom of inflation, true. But I don't see how just a subset of businesses raising prices necessarily causes long term inflation. Even if all the existing grocery stores collude to raise prices together, that would just create market pressure for other grocery stores to pop up that can undercut and obtain a large amount of market share from the colluding businesses. So sure, there may be a blip of "inflation" while the market corrects and the new businesses start up, but overall it shouldn't cause actual inflation.
Eumenes 4y ago
[flagged]
ctoth 4y ago
I submitted this post, and so I suppose that would make me "mathematically innumerate" (which seems a bit like calling someone literately dyslexic.) I submitted it because I noticed that my grocery prices were vastly higher over the last year than the 10% quoted inflation would seem to predict and thought it would be interesting to see what this community thinks. Most of us are shielded from stuff like this, and so also I thought it would be useful to inject a little everyman perspective into our tech bubble :)
- Kiro 4y ago
  The quoted 10% is a mean and doesn't imply that all prices are affected evenly.
- lend000 4y ago
  CPI is also a broken measure due to its inability to measure wealth inequality (sampling median purchasers only) and discretionary hedonic adjustments. Real inflation has likely been ~33% higher than reported for decades (the Big Mac index is probably the true gold standard).
  - gruez 4y ago
    >CPI is also a broken measure due to its inability to measure wealth inequality (sampling median purchasers only) And that's fine, because the CPI's job is to measure how prices have changed (ie. inflation), not wealth inequality. Just because a given metric doesn't support your pet cause doesn't mean it's "broken". It's like complaining GDP is a broken metric because it doesn't measure how oppressed minorities are. > Real inflation has likely been ~33% higher than reported for decades (the Big Mac index is probably the true gold standard). I tried to confirm this and the results were far from conclusive. The big mac index data can be obtained from github[1] and gives a 129.9% increase between april 2000 (earliest data available) and july 2022 (latest data available). To compare this against the CPI data, I checked on FRED and the "Consumer Price Index for All Urban Consumers: Food Away from Home in U.S. City Average"[2] component of the CPI gives a 87.0% for the same time period. If you take those numbers and convert them to annualized rates, you will indeed find a 33.3% difference between them. Looks like your claim is confirmed, right? But not so fast. The CPI category listed above actually breaks down into more detailed categories, including "Limited service meals and snacks", which presumably the big mac falls into. That data isn't available on FRED but can be found on BLS's data viewer[3] and gives you a 105.8% increase for the same time period. If you convert that to an annualized rate the difference between that and the big mac index drops to 15%. I suspect if we try harder we can eliminate more of the discrepancy. For instance, the "Limited service meals and snacks" index was probably computed from a basket of items, not just big macs. Items that have fatter margins (eg. fries or drinks) might have inflated slower than big macs, thereby dragging the growth of the basket down and explaining the difference. [1] https://github.com/TheEconomist/big-mac-data/ https://github.com/TheEconomist/big-mac-data/ [2] https://fred.stlouisfed.org/series/CUSR0000SEFV https://fred.stlouisfed.org/series/CUSR0000SEFV [3] https://beta.bls.gov/dataViewer/view https://beta.bls.gov/dataViewer/view
flandish 4y ago
Correcting numbers is one thing but your post reads like it’s trying to say OP wasn’t good enough so the point is invalid. Let me state it clearer: For industry directly related to life, health, safety, shelter, food, and education, profit is theft via gouged prices mixed with stolen wage. Any amount. No “numbers” needed. This kind of stuff should be nationalized. Especially if the US is as “strong” and smart a nation as we claim we are.

ImHereToVote 4y ago

[flagged]

giuliomagnifico 4y ago

> Food companies can raise prices. Consumers can’t do much about it. Yes, we can avoid to buy those products, but the issue is, like the article says, the monopoly. If all the products are made by the same company/ies, only with different sub-brands, then the politics and magistrates should take a look into it.

programmertote 4y ago
Monopoly increases the risk of greed-fueled inflation for sure. I am of the opinion that the inflation that we are seeing now started off with fundamental issues with the economy (oil production and prices; COVID-related government programs; too many years of cheap money provided by the government), but it sticks around because of greed. I have been consciously trying to cut down on the expenditure on snacks, food (like eggs) and other items like laundry detergent that obviously have gone up significantly in price (more so than inflation rate) and/or have been shrinkflating noticeably. It is not easy, but that's the best I can do to send a message (I know, me doing alone is inconsequential) to some of these producers that they have a limit on how much they can raise. I am also 100% aware that a lot of people (esp. the ones with families) don't have the luxury to reduce consumption like myself though.

yieldcrv 4y ago

Its not either-or. Price gauging versus stimulus. Corporations wouldn't have these profits if people didn't have excess cash to pay. The entire plan for the fight against inflation is "demand destruction", which is a euphemism for creating unemployed homeless peasant families that are intended to die under a tarp in Los Angeles. It means "run out of money and stop buying" with no plan for your survival. Corporations can try eek out higher earnings with any price, a different corporation or group of people will notice that there is a business model for undercutting it. Good for them, it has nothing to do with how fast or slow they can get into the market, and it won't matter for you if there is a disruption in your income and savings. But that's the reality.

trappist 4y ago

Production happens over time. Businesses pay for their inputs at one price level, do production things, then sell their final outputs at a higher price level, resulting in higher margins than would be possible under stable prices.

borissk 4y ago

There are just a few big companies left in many industrial sectors. Easy for them to reach an agreement to raise prices together. The people that run the two parties are not going to do anything about it (or let government administration do anything about it) until the people go out on the streets.

dw_arthur 4y ago
This is a huge part of the problem. In my large metro area there are two local grocery chains and they are known for squatting on properties to block competitors from coming in. Thankfully in recent years other grocery chains have slowly started opening stores.
dclowd9901 4y ago
Go out in the streets and do what? We’ve protested about everything. Nobody cares. And why would they? We’re not the ones who put them in the seat of power. It’s these same large corporations that do.
- ilrwbwrkhv 4y ago
  Nah we haven't protested. The French are protesting. When you can see fire, that's when you know you're protesting. Marching with banners does fuck all.
  - AlexandrB 4y ago
    We had plenty of fires during BLM. Little changed.
    - ilrwbwrkhv 4y ago
      Nah those were quickly rejected by the BLM leadership as "not one of ours"
    - ahoy 4y ago
      In my city, we had a month of enormous BLM protests. The result was an increase police budget and less funding for schools and parks. I honestly don't see that kind of mostly peaceful mass protest as productive anymore.

FooBarBizBazz 4y ago

Even though supermarket prices have gone up, what's really gone up is prepared food, even at cheap places. You can almost feed yourself for a week for the cost of one visit to McDonald's.

dw_arthur 4y ago
I stopped eating out when the pandemic started and I can't remember the last time I had a meal out where I was satisfied with the price and quality.
- sokoloff 4y ago
  In 2019, large cheese pizzas used to be $5 at our favorite pizza place. They’re $16 now. That caused us to find a new second-favorite pizza place, where a large cheese is also $16, but is at least better tasting. We can make an acceptable pizza at home for around $5, making that our new first-favorite pizza place.
Espressosaurus 4y ago
I buy mostly unprepared foods (raw meats, raw vegetables, coffee, milk, tofu, eggs, ...) and I've seen my grocery bill double in the last 5 years. Looking at random fast food places I go to, I've seen those prices nearly double as well. Pizza prices have nearly doubled to where a $20 pie is now close to $40.
jimmygrapes 4y ago
10 piece boneless wings at my nearest chain sports bar type restaurant now costs $16.99. They have specials on Wednesdays where you can buy 10 get 10 free (with beverage purchase). In 2022 it was $12.99 for the same. In 2021 and 2020 it was $8.99. In 2019 it was $6.99. All pre-tax and pre-tip, of course. Only four years difference, and I don't think chicken shortages were the cause.
bob1029 4y ago
> what's really gone up is prepared food, even at cheap places. My observation is that it has increased by the same rate on both sides, so DIY cooking has the same relative advantage. The absolute impact is simply larger now. My monthly grocery bill is right under $500 today - just for myself. But, this is very nearly 100% of my meals. I will eat out about 10-20 times a year. I think meal prep is pretty much mandatory if you want to enjoy quality food without spending 4 figures/m. I find time in the kitchen is fantastic for unwinding from work or filling dead time between tasks. I run 3 batches throughout the week, each usually good for 7 days. The system is sophisticated at this point with a "queue" in my freezer and color-coded containers. Right now, if I did absolutely no more cooking, I could enjoy high-quality meals for another week. Living with a reasonable buffer of food in your freezer will change how you do things. For me, the temptation to order a pizza is almost always negated when very tasty chicken-fried rice is only 3-5 minutes away and already paid for.

tempsy 4y ago

Personally a big change I’ve noticed about my own grocery shopping habits is that I spend more to get the high quality stuff. eg organic pasture raised eggs, grass fed beef, grass fed dairy, etc. There’s a lot more of this “premium” stuff than a few years ago. I suspect if it’s included in some average it will look like things are getting much more expensive when part of what’s happening is upscaling of a lot of items.

borissk 4y ago
So you're saying that grocery prices today are mostly the same as they were in 2019?
- tempsy 4y ago
  no i didn’t say that, i just mean that if there’s upscaling happening in eggs, meat, dairy then averages will look higher than if that wasn’t happening it’s still going to be higher, but not necessarily as much as it’s being portrayed if you’re buying conventional stuff
  - borissk 4y ago
    Good for you and well done that you're able to afford to buy better stuff. But there's a big group of people that has a problem buying food now and didn't have that problem 5 years ago. I think on average probably the opposite of what you're suggesting is happening - people are buying cheaper goods, which to a small degree can mask the real price increase.
    - tempsy 4y ago
      the egg section looks completely different now than a few years ago. clearly there is a lot of new demand for $10/dozen organic pasture raised no corn or soy eggs. these are options that weren’t even available even a few years ago.
carlosjobim 4y ago
The "premium" stuff is what used to be average quality in the past, while the normal stuff has declined sharply in quality.

adamredwoods 4y ago

>> Grocery retailers, too, have become increasingly consolidated. The ongoing Kroger-Albertsons merger, which could be blocked by the FTC, for example, has raised alarm bells from consumer advocates; if the merger goes through, Kroger-Albertsons and Walmart together would control 70 percent of their industry. In fiscal year 2022, Kroger’s operating profit was $4.1 billion — in 2021, it was $3.5 billion. Since the pandemic began, Kroger has paid billions in dividends to its shareholders. This part is key to me. The larger the consolidation, the more they answer to stockholders, and not to customers or competition. Stockholders only care about stock price [1]. There's no value in caring for the consumer class. [1] https://bts.com/2017/11/01/who-do-you-put-first-the-stakeholder-you-choose-defines-your-company-culture/ https://bts.com/2017/11/01/who-do-you-put-first-the-stakehol...

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WalterBright 4y ago

> Once companies raise prices, they don’t tend to lower them even if input costs go down. Pump prices for gas go up and down on a daily basis. > Since the pandemic began, Kroger has paid billions in dividends to its shareholders. Kroger stock is up 23.5% over the last 5 years. For comparison, the S&P 500 has gone up 51% over the last 5 years. The article is a little short on a compelling argument.

kcolford 4y ago
You didn’t adjust for risk in your comparison. The s&p 500 has many companies in it that are far riskier than a grocery store chain. Now I can’t say for sure what the aggregate risk is, so you may still be on to something there. In this instance though you’re comparing apples to oranges.
- WalterBright 4y ago
  > The s&p 500 has many companies in it that are far riskier Yes, "many" companies. But it's five hundred of the biggest companies, including Kroger. There's no way around it - KR is a significantly underperforming stock, and a lousy investment. If you think KR is a good investment, buy some shares in it. I'll pass, no thanks.

transfire 4y ago

What pisses me off even more is how the big companies force the little ones out of business whenever they have a successful product. They either buy them out and then proceed to ruin the produce, sue them out existence over bullshit, or they use their clout with grocers to not carry the items. This happened to cake mix a few years back for instance. Ironically it had an interesting backlash b/c now the cake mix section is tiny because there’s nothing left but crap and no one wants another stomach ache.

jmyeet 4y ago

Once again, the solution to high inflation isn't Fed monetary policy, it's taxation. Corporate profits windflal tax at a punitive rate and income distribution to those worst affected. Additionally taxes on resource extraction (eg oil and gas, mining) should permanently be high a la Norway.

gruez 4y ago
> Once again, the solution to high inflation isn't Fed monetary policy, it's taxation. Corporate profits windflal tax at a punitive rate and income distribution to those worst affected. That sounds like a great way to push companies to invest even less into disaster preparedness. Why bother pay extra money into supplying your supply chain for the next supply disruption, when you know that you'll get painted as profiteers by the government and slapped with a windfall tax? It's far better to run your business as lean as possible during the good times and extract all the money you can without the risk of being villanized.
- jmyeet 4y ago
  You have it backwards. Companies aren't investing in their business in any way. They're simply funennling huge profits to shareholders in the forms of share buybacks. That's it. A high profit tax would actually encourage them to invest in their business. > It's far better to run your business as lean as possible during the good times and extract all the money you can without the risk of being villanized. Wow. This is textbook capitalist propaganda. "Villainized"? When profiteering is responsible for the majority of inflation, you should be villainized. You shouldn't necessarily be expected to do the right thing altruistically. That's what the windfall profits tax is for.
  - gruez 4y ago
    >Companies aren't investing in their business in any way. They're simply funennling huge profits to shareholders in the forms of share buybacks. That's it. >A high profit tax would actually encourage them to invest in their business. Time is a factor here. Just because you made $10M in excess profits this year because of avian flu, doesn't mean it makes sense to dump all of that into chicken farm in the same year. Even if we ignore the time factor, we have to consider that there might be better uses of the money, for instance shoring up investment in other sectors like semiconductors. Returning money to shareholders allows this to happen. >Wow. This is textbook capitalist propaganda. "Villainized"? When profiteering is responsible for the majority of inflation, you should be villainized. You shouldn't necessarily be expected to do the right thing altruistically. That's what the windfall profits tax is for. And what you're saying is textbook Marxist propaganda, so can we skip the ad hominems and stay on topic? By this construction you'll always have a villain, because there's always going to be sectors that have higher inflation than normal. If your construction of a villain one to always exist by definition and without regard for actions or motivation, then I argue that your definition is seriously flawed. Also, you seemed to have missed the point in my previous comment entirely. Let me rephrase it with an example: Suppose we have two egg farmers, Alice and Bob. Alice tries to do The Right Thing by having proper biosecurity practices (eg. smaller/isolated hen houses, proper training for staff, frequent monitoring for infection). Bob on the other hand does the bare minimum and cuts corners where he can. During normal times, all the extra precautions costs Alice money and either makes her offerings less competitive or eats into her profits, and meanwhile Bob gets to rake in all the extra money. Now suppose the avian flu rolls around, and Bob's flock is decimated while Alice's flock is unscathed due to the investments she had in the years prior. The shortage combined with Alice's flock being unscathed allows her to charge make more profits during the disaster, and for her to recoup her losses in the years prior. However, because she's making extra profits, she gets branded as the villain for hiking practices for no good reason. She didn't even lose any hens! How dare she raise prices! Meanwhile Bob avoids all of this, and maybe is even able to play the victim card and get the government to bail him out. So much for incentivizing long term thinking.

balderdash 4y ago

My takeaway here though is that while I don’t condone the practice it also means that consumers are not willing to substitute/bargain shop. I’m pretty sure you could charge $25 for a dozen eggs at whole Foods and most shoppers wouldn’t think it’s worth their time to even try to comparison shop

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amai 4y ago

tldr; Capitalism is failing, because we have monopolies/oligopolies everywhere.