Italian here. I don’t see this price increase at the moment. Anyway going from 2-3€/kg to 2,3-3,6€/kg wouldn’t make big difference. Pasta is already very cheap.
Instead I see the inflation rising in the fruit and vegetables prices! There’s a 25-30% increases since the beginning of the 2021.
Yes I read, I wanted to say that anyway pasta is quite cheap, so you can’t feel the difference like on the petrol/diesel price in example.
We already have a lot of prices increase from coffee (from 0,9€ to 1,2€) to a glass of wine (from 1€ to 1,20/30€), and a lot of other Italian typical foods that are hurting us.
Anyway the price of pasta can be already different in Italy, south is cheaper. I hope this would not coming in winter or starting in 2022, but we’ll see what will happen.
(Fortunately we don’t eat pasta at Christmas dinner =] )
I don’t understand what is your “surprise”, anyway yes here in Italy the pasta is cheaper, but if the price will rise, it should be about 0,20-0,40€/kg. There’re a lot of articles about this also in Italy, in example:
"I know that Lidl has already increased the price of pasta by 10 cents - he adds - and I expect that well before Christmas everyone will expect increases between 15 and 20 cents per package".
So, it will be noticeable but not impossible to handle, there’re a lot of prices increase in 2021, as I said, pasta is the one we (Italian) care less fortunately because it’s a small increase.
Of course you can. That is what government statistics and academic studies are for.
But the source here, I believe was from an executive of a pasta factory.
It would be surprising to me if essentially all the pasta in Italy was made by one producer and sold at one price, such that you could talk about trends in fractions of a Euro based on one interview like this.
I'm used to staples being sold at different price points within a grocery store and across different stores or different communities.
Not a range of 40-80% like your sample numbers, but 300% or more.
The price chart in the article showing the +50% rise is labeled "IT durum wheat DELFIRST". I believe the "IT" stands for "Italy", so this is already showing the effect on the Italian market.
Yes but for the imported durum wheat, that it doesn’t mean it used for Italian pasta, at least not all the pastas because on Italian brands are usi no their own fields for the durum wheat, it isn’t an importer one.
Probably the imported durum wheat is used for other things, like farina or fodder.
I’m not saying that it will not happen a price increase, a lot of people are saying it also in Italy, but a lot less than the +50%, surely.
Here’s an interview with the CEO of an Italian pasta maker (La Molisiana):
"I know that Lidl has already increased the price of pasta by 10 cents - he adds - and I expect that well before Christmas everyone will expect increases between 15 and 20 cents per package".
The price of wheat produced in Italy will be more or less the same as the price of wheat produced abroad, otherwise Italian producers would be losing money. But wheat price is not the main determinant of retail pasta price, which is more likely dominated by labour and distribution costs and taxes.
Wow. Just a few Kms across the Mediterranean, Pasta sells for around 0.29€/kg. Also, this is the "favorite?" food for people who have tight incomes, so they might be very sensitive to these changes.
> Instead I see the inflation rising in the fruit and vegetables prices! There’s a 25-30% increases since the beginning of the 2021.
It's only a matter of time it spreads to the rest of the basket. I guess the pro-MMT folks are hiding now.
Barilla is good but is not the highest quality brand, it is the most famous because of ads. De Cecco is better and slightly cheaper (I checked your link), possibly because they spend less in ad campaigns (and maybe in packaging?).
Yes I agree, also Pasta Voiello is a good one (and La Molisiana), I’m using Barilla as example because it’s the most famous. Anyway other best brands ar usually on the same price as Barilla, or slightly more expensive.
The article you linked says that they had difficulty planting because of weather conditions - that doesn't seem planned, or in any way related to modern monetary theory.
With both France and the UK each projected to see a more than a 5-million-tonne reduction in their 2020-21 wheat crops, EU wheat output is forecast to fall by nearly 11 million tonnes year-on-year to 144 million tonnes due to a 700,000-hectare decrease in planted area.
That’s seems like they are removing land from production unless I understand that wrong.
There certainly was a massive late cold that too (extremely rare) impacted the Rhône banks (big fruit region in France). I don't know about Italy but we're in for a very expensive turn of year.
I'm not surprised wheat is touched too.
My only gripe is that prices usually don't come down when the original problem causing the spike went away (say one or two years after). I'd like to understand why but feel it's one of these questions I'm not going to like the answer...
Prices do frequently come down for wheat and other agricultural commodities. However those commodity prices are only loosely correlated to prices that you pay at the grocery store.
Ah, yes, good reminder, thanks. Then I have my baker to thank next time he raises prices... 'because wheat prices, you know' and never taking them down.
From the article, that you obviously didn't bother to read:
"Drought and heat continued to hurt the wheat harvest in July in Canada, the world’s biggest supplier of durum wheat, months after a harsh winter hit the Russian crop. Grain shipments from Western Canadian port terminal elevators tumbled 41% in the third week of August from a year-ago, according to a Quorum Corp. report. European crop quality was also hurt by heavy rains over the summer."
It seems that we better apply some lessons from MMT for a fast transition to green energy soon.
For anyone interested in learning more about MMT :
>>Can it ever recover if people lose trust in it? Since that's a major part of what's keeping such a system going.
This is the most important thing MMT supporters seem to ignore. Fiat money is a confidence game and all the theories will be pointless if people lose trust in the money.
A government only accept its currency to pay taxes -> you have to pay taxes -> you need the currency even if you lose trust in it.
It's the power of raising taxes what gives money its value.
"Variations of the modern-money narrative are found repeatedly throughout history. The levying of monetary taxes to create waged labor was “a nearly universal experience throughout Africa” in the colonial era, explains economist Randall Wray. Hut taxes, coupled with extreme violence and racial segregation, forced unwilling migrant laborers into the gold and diamond mines of South Africa. Bernard Magubane, an anthropologist, described the purpose of these taxes as being to “increase the economic pressure on the African peasants” to force them into waged work."
OK that makes sense. But what about everything else besides taxes? If people don't trust a currency, they can begrudgingly use it to pay taxes.
What about food, fuel, clothes, etc? Taxes on everything will only go so far, at some point people will just trade all that illegally, on black markets, using different currencies.
Actually, I think that's the case in some countries today and the Soviet Union had a similar situation, people practically bartered, ignoring the state.
Maybe the most important lesson of MMT is that public debt, deficits and all those things that so frequently are at the center of the public debate are irrelevant compared to what's really important: real resources.
It doesn't matter if you have a big or small public debt (in your own currency), what's important is the real things in the economy.
If people is, for instance, using dollars instead of the currency of the country, it's, probably, because your country depend totally on imports (in the worst cases for basic things like food or energy).
If that's the case, the first steep to solve it, it's to recognize the problem. If you don't recognize the problem, you will finish addressing virtual problems like deficits or public debts instead of real resources constrains. Those are very difficult problems to address, but it will be even more difficult if you don't understand them.
The mainstream advice to development is: open your economy to competition, reduce deficits and public debt. The result of that is the impossibility of an agricultural, infrastructure or industrial policy that solve the real resources problem.
Our tax system largely functions on trust and voluntary compliance. Once citizens lose faith in their fiat currency they're more likely to cheat on their taxes or just refuse to pay.
> It's the power of raising taxes what gives money its value.
People can convert their BTC to USD at their obligation day and then your currency is only worth what % you collect in taxes. I don't think taxation will be the model for MMT, and only when you separate taxation, investment (storage of wealth) and daily transactions that you can get a healthy working system.
> So basically, the way I understand it, money is just a means of getting people to do work.
More like get (or enable) people to trade with one another.
> So the ceiling is much higher, but there's still a ceiling - go too high and your currency is in trouble.
I think this is the problem with MMT as it doesn't give an answer to what should you use to store wealth. Money should not be used to store wealth (that's not its goal) but to make a transaction possible between two counter-parties.
> Can it ever recover if people lose trust in it? Since that's a major part of what's keeping such a system going.
You shouldn't really care. Think if we can develop a system where one could work and exchange value in one currency, and store value in another currency. The first currency should disappear as soon as the transaction ends, and should appear as soon as there is a need to transact. The second currency gives a society IOU to give you a transaction in the first currency in the future.
I'm also pro-MMT and Stephanie is one of my favorite's. I don't think the current events are going to help as people will not understand the difference between a supply choc and a monetary base increase. It doesn't help that some politicians will try to use MMT to pay out for other stuff rather than use it for what it is. It also doesn't help that MMT is still loosely defined.
I'm not sure if you are aware but the majority of italians eat pasta roughly once per day, as the main course. It's definitely NOT for tight incomes only, it's for everyone. It's just incredibly tasty.
Also, what makes the price is the sauce.
> Anyway going from 2-3€/kg to 2,3-3,6€/kg wouldn’t make big difference.
It could be much more by the end of the year, according to the article. Although to be honest i've never bought pasta that expensive (usually i buy < 1.5€/kg here in France).
So... as a pasta-loving American, wouldn't this affect us as well? I understand markets can be different but they're talking about Canadian wheat exports, not Italian domestic production.
There are news sites dedicated to agricultural news that have articles about US wheat production, which includes durum. The forecasts don't look positive.
Seriously though, every single thing has been going up in price lately. The inflation is real. Over 50% here, another 50% there and there went our savings
> According to Ferro, big pasta producers are already rushing to stock grain, which can be stored for up to two years.
So how much of this price rise is genuine demand and how much is a panicky market bulk buying in response to a perceived future shortage? Sounds like we might have a bit of a toilet paper situation here.
Inflation causes inflation due to behavioral changes induced by the fear of inflation. It’s a snowball effect, so the answer to your question is, only time will tell.
Well it's not a big deal for people in Europe if grain prices go up or down by 50% so the headline is a bit ridiculous. Nobody in Italy is going to starve.
I did food distribution to students last winter and... The kids are living on pasta & rice, the cheapest one near the ground in supermarkets. They've teamed up to try and buy larger quantities/lower price. Same w/ dairy and basic staples. The kids I met there probably won't handle that increase well.
I mean the nonprofit giving them food flyers were all 'give veggies, fruits, bottled/canned sauce, they're already only eating pasta and we've got them on that.'
I was a penniless student minmaxing food price/consumption, but this is a slaughter.
And, we've taken (big corp) as many interns we could take (4 times more than usual), stretching everything, and I know some of them interns would have liked more attention, more guidance and I was upfront, this is a special time, we're taking as many as we can, they'll have a (not so great, but better than most SMEs) salary for 4 or 6 months and industry experience in a well-known company, and we'll give them real subjects and treat them with respect. Just less availability and guidance than what we were used to. Sorry not sorry.
Of course we got work in exchange, but if you don't try to help now, when will you.
Turns out, the results of this are amazing. Success or failure of the internship subjects, we've learned SO much from all the experiences, many of our young colleagues now have a tiny management experience, some really want to take more next years, some are more 'not for me but I'll help if you ask' and some are 'uh people management is not for me'. And there's a good mood from all this.
Most of the interns were amazing, ultra motivated, and (it's cynical, I know) so grateful. It's going to sound very trumpian but some of them, (not 'big guys, strong guys') when announced we were taking them in, literally melt down crying. One of them came in the last days of his stay, telling me he was so grateful we 'saved' him, because he couldn't find anything (the boy is top-5 in his school, WTF). Most of them came to me or their supervisor in the last days saying how hard it was out there and how relieved they were.
It was a hard year (try seriously reading, reviewing, correcting, RE-READING 35 internship reports/memos in 3 weeks), but no regrets.
Is there a reason why every price increase is referred to as "inflation" these days? I thought inflation had more to do with debasement of a currency than price fluctuations due to supply and demand, with the key functional distinction being that the former can be hard to reverse while the latter can self-correct given time (e.g. the lumber price increase we saw this summer).
> An increase in the money supply may be called monetary inflation, to distinguish it from rising prices, which for clarity may be called "price inflation".
According to you, what kind of factors leading to an increase in wheat prices, would make it inflation?
In our modern economy, prices are often determined by supply, which can be influenced by factors like climate. Absolutely expected that it would cause inflation.
Technically true. But inflation as a function of monetary / fiscal policy is top of mind for many right now — and what most people picture when they hear the word — and so it’s helpful to draw a distinction.
71 comments
[ 2.8 ms ] story [ 135 ms ] threadArticle suggests pasta price increase may kick in over the next few months.
We already have a lot of prices increase from coffee (from 0,9€ to 1,2€) to a glass of wine (from 1€ to 1,20/30€), and a lot of other Italian typical foods that are hurting us.
Anyway the price of pasta can be already different in Italy, south is cheaper. I hope this would not coming in winter or starting in 2022, but we’ll see what will happen.
(Fortunately we don’t eat pasta at Christmas dinner =] )
At a popular grocery chain, the store brand of pasta is 1,9€/kg, which is the price I'm mentally anchored to ($1/lb).
But Barilla is the equivalent of 3,3€/kg, and that's what I generally buy.
Then there are the specialty or organic brands touted as "premium" or made with "bronze dies" that are like 6€/kg.
I am surprised if it is possible to generalize like you do for coffee and wine. I am used to there being a huge range of prices for any staple.
A thing I am noticing more and more is that the larger containers often have higher unit pricing.
"I know that Lidl has already increased the price of pasta by 10 cents - he adds - and I expect that well before Christmas everyone will expect increases between 15 and 20 cents per package".
https://www.leggo.it/alimentazione/news/pasta_allarme_grano_...
So, it will be noticeable but not impossible to handle, there’re a lot of prices increase in 2021, as I said, pasta is the one we (Italian) care less fortunately because it’s a small increase.
As I said, pasta ranges in price very widely here.
So do coffee and wine.
So I do not know what it means when somebody says coffee costs <X> and wine costs <Y>. How can it be so standardized?
For instance you can say that wine in the UK costs on average 9£ per litre and that cheap wine cost 5-7£ per litre (I’m making up numbers).
But the source here, I believe was from an executive of a pasta factory.
It would be surprising to me if essentially all the pasta in Italy was made by one producer and sold at one price, such that you could talk about trends in fractions of a Euro based on one interview like this.
I'm used to staples being sold at different price points within a grocery store and across different stores or different communities.
Not a range of 40-80% like your sample numbers, but 300% or more.
The article shows that durum wheat prices have increased by more than 50%.
So assuming that the dominant factor in the price of pasta is the price of wheat, the price rise would be more like going from 2-3€/kg to 3-4.5€/kg
Probably the imported durum wheat is used for other things, like farina or fodder.
I’m not saying that it will not happen a price increase, a lot of people are saying it also in Italy, but a lot less than the +50%, surely.
Here’s an interview with the CEO of an Italian pasta maker (La Molisiana):
"I know that Lidl has already increased the price of pasta by 10 cents - he adds - and I expect that well before Christmas everyone will expect increases between 15 and 20 cents per package".
Translate it: https://www.leggo.it/alimentazione/news/pasta_allarme_grano_...
durum wheat is "frumento duro".
The price now is 458,00 €/T which quite high.
https://www.ismeamercati.it/flex/cm/pages/ServeBLOB.php/L/IT...
Apparently in 2008 the price of wheat peaked at twice its current price (https://www.ifcm.co.uk/market-data/commodities-prices/wheat), but the price of pasta hasn’t halved since then.
Cheap brand pasta are barely more expensive than that (0.7-1.2€/kg), so that sounds like that's the dominant factor at least for some brands.
> Instead I see the inflation rising in the fruit and vegetables prices! There’s a 25-30% increases since the beginning of the 2021.
It's only a matter of time it spreads to the rest of the basket. I guess the pro-MMT folks are hiding now.
I don’t think you will find a box of 0.5kg of pasta at 0.15€ in Europe. Maybe you’re getting confused between a box (half a kilo) and a kilo of pasta.
https://www.sainsburys.co.uk/gol-ui/Product/hubbards-foodsto...
Not saying that it’s equivalent quality to Barilla but it’s definitely much cheaper
Barilla 1,6€ https://www.carrefour.it/p/barilla-tortiglioni-n%C2%B083-1kg...
Brand not famous 0,7€: https://www.carrefour.it/p/pasta-reggia-48.-fusilli-1-kg/800...
But the price can be very different if you want a top pasta
Do you have any data to suggest that modern monetary theory is a more important factor here?
Edit: maybe that's not what you're suggesting, anyway, still curious.
https://www.world-grain.com/articles/13660-usda-eu-grain-out...
That’s seems like they are removing land from production unless I understand that wrong.
> The European Union’s grain output in 2020-21 is forecast to decline by 3% over the previous year due to extremely challenging planting conditions
My understanding is that they cannot plant due to the weather conditions.
I'm not surprised wheat is touched too.
My only gripe is that prices usually don't come down when the original problem causing the spike went away (say one or two years after). I'd like to understand why but feel it's one of these questions I'm not going to like the answer...
https://tradingeconomics.com/commodity/wheat
From the article, that you obviously didn't bother to read:
"Drought and heat continued to hurt the wheat harvest in July in Canada, the world’s biggest supplier of durum wheat, months after a harsh winter hit the Russian crop. Grain shipments from Western Canadian port terminal elevators tumbled 41% in the third week of August from a year-ago, according to a Quorum Corp. report. European crop quality was also hurt by heavy rains over the summer."
It seems that we better apply some lessons from MMT for a fast transition to green energy soon.
For anyone interested in learning more about MMT :
https://www.youtube.com/watch?v=WS9nP-BKa3M
(Presidential Lecture Series: Stephanie Kelton, video)
All of this work/activity is for fiat currency what gold was in the gold standard.
So the ceiling is much higher, but there's still a ceiling - go too high and your currency is in trouble.
Also manage the removal of money properly - too much tax and people are in trouble, which leads to your currency being in trouble.
Can it ever recover if people lose trust in it? Since that's a major part of what's keeping such a system going.
This is the most important thing MMT supporters seem to ignore. Fiat money is a confidence game and all the theories will be pointless if people lose trust in the money.
It's the power of raising taxes what gives money its value.
"Variations of the modern-money narrative are found repeatedly throughout history. The levying of monetary taxes to create waged labor was “a nearly universal experience throughout Africa” in the colonial era, explains economist Randall Wray. Hut taxes, coupled with extreme violence and racial segregation, forced unwilling migrant laborers into the gold and diamond mines of South Africa. Bernard Magubane, an anthropologist, described the purpose of these taxes as being to “increase the economic pressure on the African peasants” to force them into waged work."
from: https://thenewinquiry.com/the-world-according-to-modern-mone...
What about food, fuel, clothes, etc? Taxes on everything will only go so far, at some point people will just trade all that illegally, on black markets, using different currencies.
Actually, I think that's the case in some countries today and the Soviet Union had a similar situation, people practically bartered, ignoring the state.
It doesn't matter if you have a big or small public debt (in your own currency), what's important is the real things in the economy.
If people is, for instance, using dollars instead of the currency of the country, it's, probably, because your country depend totally on imports (in the worst cases for basic things like food or energy).
If that's the case, the first steep to solve it, it's to recognize the problem. If you don't recognize the problem, you will finish addressing virtual problems like deficits or public debts instead of real resources constrains. Those are very difficult problems to address, but it will be even more difficult if you don't understand them.
The mainstream advice to development is: open your economy to competition, reduce deficits and public debt. The result of that is the impossibility of an agricultural, infrastructure or industrial policy that solve the real resources problem.
People can convert their BTC to USD at their obligation day and then your currency is only worth what % you collect in taxes. I don't think taxation will be the model for MMT, and only when you separate taxation, investment (storage of wealth) and daily transactions that you can get a healthy working system.
In the end, there will always be a government and people will need to trade.
More like get (or enable) people to trade with one another.
> So the ceiling is much higher, but there's still a ceiling - go too high and your currency is in trouble.
I think this is the problem with MMT as it doesn't give an answer to what should you use to store wealth. Money should not be used to store wealth (that's not its goal) but to make a transaction possible between two counter-parties.
> Can it ever recover if people lose trust in it? Since that's a major part of what's keeping such a system going.
You shouldn't really care. Think if we can develop a system where one could work and exchange value in one currency, and store value in another currency. The first currency should disappear as soon as the transaction ends, and should appear as soon as there is a need to transact. The second currency gives a society IOU to give you a transaction in the first currency in the future.
Not sure how to do it, really.
It could be much more by the end of the year, according to the article. Although to be honest i've never bought pasta that expensive (usually i buy < 1.5€/kg here in France).
https://agfax.com/2021/07/23/wheat-drought-threatens-product...
https://ndwheat.com/growers/progress/dakotagoldnewsletter/WM...
https://youtube.com/watch?v=tVo_wkxH9dU
Seriously though, every single thing has been going up in price lately. The inflation is real. Over 50% here, another 50% there and there went our savings
So how much of this price rise is genuine demand and how much is a panicky market bulk buying in response to a perceived future shortage? Sounds like we might have a bit of a toilet paper situation here.
“Pasta is cheap anyway” is such a privileged point of view.
I mean the nonprofit giving them food flyers were all 'give veggies, fruits, bottled/canned sauce, they're already only eating pasta and we've got them on that.'
I was a penniless student minmaxing food price/consumption, but this is a slaughter.
Of course we got work in exchange, but if you don't try to help now, when will you.
Turns out, the results of this are amazing. Success or failure of the internship subjects, we've learned SO much from all the experiences, many of our young colleagues now have a tiny management experience, some really want to take more next years, some are more 'not for me but I'll help if you ask' and some are 'uh people management is not for me'. And there's a good mood from all this.
Most of the interns were amazing, ultra motivated, and (it's cynical, I know) so grateful. It's going to sound very trumpian but some of them, (not 'big guys, strong guys') when announced we were taking them in, literally melt down crying. One of them came in the last days of his stay, telling me he was so grateful we 'saved' him, because he couldn't find anything (the boy is top-5 in his school, WTF). Most of them came to me or their supervisor in the last days saying how hard it was out there and how relieved they were.
It was a hard year (try seriously reading, reviewing, correcting, RE-READING 35 internship reports/memos in 3 weeks), but no regrets.
When everything conflates to inflation, it stops people from realizing the real inflation happening right under them.
Basically, inflation can be split into two types:
> An increase in the money supply may be called monetary inflation, to distinguish it from rising prices, which for clarity may be called "price inflation".
https://www.bakeryandsnacks.com/Article/2021/09/10/Out-of-co...
In our modern economy, prices are often determined by supply, which can be influenced by factors like climate. Absolutely expected that it would cause inflation.