3 ms·

tl;dr: Food prices are growing due to material shortages (war, drought), price stickiness, wage growth, and higher profit margins on substitute goods that weren

by vkou 3y ago

tl;dr: Food prices are growing due to material shortages (war, drought), price stickiness, wage growth, and higher profit margins on substitute goods that weren't affected by the other causes. This translates into higher prices at the cash register, both at the grocery, and at the restaurant. Nothing all that interesting.

goalieca 3y ago
You had me until the end. This is of great interest!
- vkou 3y ago
  I mean, there's no singular smoking gun. It's all of these factors at once, and as such, there's no simple remedy for it. We could outlaw war and drought, I suppose. We could have more labour done by indentures and slaves, that might drive the wage part of the equation down. We could tax or seize the profit margins and redistribute them to the people buying $22 burritos. Or we could just live with the understanding that this is a Premium Burrito (tm) that should only be eaten for weddings or birthdays, and it's not supposed to be affordable. --- (I make Premium Burritos at home for a lot less than $22, but I also don't have to pay myself - or shovel money into rent for a hip storefront... Or raise prices by $5 because my ingredient and labor costs went up by $2...)
floxy 3y ago
Which war is causing the burrito material shortage? And what burrito materials are in short supply because of the war?
- vkou 3y ago
  War in Ukraine raises prices of wheat, fewer people buy wheat, more people buy rice, price of rice goes up. Or at least, that's the reason for why prices were up in 2022. We're no longer in 2022, though. In 2024, wheat prices are ~the same as they were in January 2020, but rice prices are ~50% higher. Whether you want to attribute that to price stickiness due to the war, drought conditions in Asia, or spirit animals, that's up to you.
- wyldberry 3y ago
  Russia -> Ukraine for a variety of reasons. Russia produce(d) a significant amount of fertilizer which is required to keep much of the world's breadbaskets and farming functioning such as farmland in Brazil. Less fertilizer means less yield from land which has cascading affects into prices of various inputs. Lower yields of onions, tomatoes, etc will raise the prices of the product. One of Ukraine's exports was wheat and sunflower products. The absence of wheat from a major producer puts the rest of the world in competition with your wheat products. In addition to bread products and much of the middle aisle of your grocery store, wheat products also go into animal feed. Higher inputs to your animal food costs. Most "quality" beef is grain-finished in the US (this is not a debate about if grain finished makes better steak, its' just a reality in restaurant supply). If you have more expensive wheat inputs for your higher quality beef, prices go up. Can't escape thermodynamics.
chiefalchemist 3y ago
You left out all the new money The Fed pumped into the system during Covid. We all know it happened. I don't understand why anyone would expect a return to pre-Covid prices.
- brewdad 3y ago
  It's also 4 years later. Even if inflation had stuck to the 2% levels we had prior to COVID, we would expect prices to be almost 10% higher today just due to baseline inflation.
  - chiefalchemist 3y ago
    Keep in mind the Consumer Price Index is manipulated in the sense different things are swapped in and out in order to get out the number they want. That is, for (random) example, consumers didn't switch from beef to pork because their tastes changed but because beef became too exoensive. But swap out beef for pork and POOF you've lowed inflation. Yeah. But you've also lowered the broader quality of the goods in the index. I don't think there is anyone I know who believes inflation is back down to 2%. Anecdotal? Sure. But perception is reality, especially in an election year.
    - seanmcdirmid 3y ago
      Inflation feels like it is about 2% here, but I think they’ve reached a ridiculous cap on things where I live. I can imagine different parts of the country (and world) getting hit differently depending on how badly they’ve already been hit.
- vkou 3y ago
  That's what is fueling the wage growth part of what I listed. All other things being equal, pumping money into the system doesn't cause tomato prices to rise by magic. It does so through higher wages.
  - chiefalchemist 3y ago

by vkou 3y ago

goalieca 3y ago

You had me until the end. This is of great interest!

vkou 3y ago
I mean, there's no singular smoking gun. It's all of these factors at once, and as such, there's no simple remedy for it. We could outlaw war and drought, I suppose. We could have more labour done by indentures and slaves, that might drive the wage part of the equation down. We could tax or seize the profit margins and redistribute them to the people buying $22 burritos. Or we could just live with the understanding that this is a Premium Burrito (tm) that should only be eaten for weddings or birthdays, and it's not supposed to be affordable. --- (I make Premium Burritos at home for a lot less than $22, but I also don't have to pay myself - or shovel money into rent for a hip storefront... Or raise prices by $5 because my ingredient and labor costs went up by $2...)

floxy 3y ago

Which war is causing the burrito material shortage? And what burrito materials are in short supply because of the war?

vkou 3y ago
War in Ukraine raises prices of wheat, fewer people buy wheat, more people buy rice, price of rice goes up. Or at least, that's the reason for why prices were up in 2022. We're no longer in 2022, though. In 2024, wheat prices are ~the same as they were in January 2020, but rice prices are ~50% higher. Whether you want to attribute that to price stickiness due to the war, drought conditions in Asia, or spirit animals, that's up to you.
wyldberry 3y ago
Russia -> Ukraine for a variety of reasons. Russia produce(d) a significant amount of fertilizer which is required to keep much of the world's breadbaskets and farming functioning such as farmland in Brazil. Less fertilizer means less yield from land which has cascading affects into prices of various inputs. Lower yields of onions, tomatoes, etc will raise the prices of the product. One of Ukraine's exports was wheat and sunflower products. The absence of wheat from a major producer puts the rest of the world in competition with your wheat products. In addition to bread products and much of the middle aisle of your grocery store, wheat products also go into animal feed. Higher inputs to your animal food costs. Most "quality" beef is grain-finished in the US (this is not a debate about if grain finished makes better steak, its' just a reality in restaurant supply). If you have more expensive wheat inputs for your higher quality beef, prices go up. Can't escape thermodynamics.

chiefalchemist 3y ago

You left out all the new money The Fed pumped into the system during Covid. We all know it happened. I don't understand why anyone would expect a return to pre-Covid prices.

brewdad 3y ago
It's also 4 years later. Even if inflation had stuck to the 2% levels we had prior to COVID, we would expect prices to be almost 10% higher today just due to baseline inflation.
- chiefalchemist 3y ago
  Keep in mind the Consumer Price Index is manipulated in the sense different things are swapped in and out in order to get out the number they want. That is, for (random) example, consumers didn't switch from beef to pork because their tastes changed but because beef became too exoensive. But swap out beef for pork and POOF you've lowed inflation. Yeah. But you've also lowered the broader quality of the goods in the index. I don't think there is anyone I know who believes inflation is back down to 2%. Anecdotal? Sure. But perception is reality, especially in an election year.
  - seanmcdirmid 3y ago
    Inflation feels like it is about 2% here, but I think they’ve reached a ridiculous cap on things where I live. I can imagine different parts of the country (and world) getting hit differently depending on how badly they’ve already been hit.
vkou 3y ago
That's what is fueling the wage growth part of what I listed. All other things being equal, pumping money into the system doesn't cause tomato prices to rise by magic. It does so through higher wages.
- chiefalchemist 3y ago