I watched this video on Instagram, where a guy had his 4-year old saved cart of groceries at Walmart and compared the check out prices today versus 2020 and it more than doubled. This is not inflation.
There were real food supply issues in and around the 2022 timeframe (if you recall, some countries had even expressed worry about running out of food), which sent the wholesale price to the moon. Things are back to normal there now.
It’s not surprising that retail reacted to that, and not immediately. Markets can be slow. The end consumer seems to be always the slowest to react, so it is no doubt the residual effects of those events.
Inflation measures the change in value of the currency. This was a change in value of food - the threat of starvation saw people see food as being more valuable. What the parent meant is that it isn’t just inflation alone. Inflation is partially responsible, but not wholly so.
For example, one of the food supply issues was the price of wheat after the invasion of Ukraine, which grows a lot of wheat. Futures shot through the roof.
Which also prompted cutting ties with Russian fertilizer – a market that was already strained due to EU shutting down fertilizer plants in the year prior. Coupled with weather events that wiped out a large portion of the US crop the year before that, along with a dash of COVID-19, and it was the perfect storm.
It is really quite amazing that it was as short-lived as it was (on the wholesale side, at least).
>In economics, inflation is a general increase in the prices of goods and services in an economy.
Even if you use a definition like "anything above the overall inflation rate", it becomes self-circular when the goods itself is in the inflation basket. Not all goods in the basket will have the same inflation rate, and the basket is the weighted average of all the goods, so they'll always be items that are above the overall inflation rate.
Demand curve shifted. Basically the average person temporarily has more money due to government stimulus, so vendors increase prices, find that overall profit increased, and keep cranking the dial. It becomes a mad rush between the product manufacturers and the retailers on who can increase the price the fastest to grab that additional profit. The only bastion of sanity is Costco, whose prices seem to increase closer in line with the underlying commodity prices.
You see this in the housing rental in constrained markets. When the minimum wage increases, the landlords can all just increase their rents, and the renters, with high moving costs, just pay. All the landlords do this, and eventually all the minimum wage gain is absorbed by the landlords. Makes me cynical that raising the minimum wage does anything other than drive inflation in the rental market. There are likely better policies to increase the quality of life of the bottom 50% than increasing the minimum wage, but our politicians have that lever, and get votes when they use it.
Bullshit. The stimulus amounted to nothing and was gone instantly, with most going to bills.
The trope that the stimulus made poor people rich and thus able to spend more is farcical.
It's greed pure and simple. First they blamed covid, then supply constraints, then they just stopped with the excuses as people just assumed this is how it is now.
Also, landlords have increased rents exponentially without an increase to minimum wage.
These are just corporations raising prices. They raise and lower prices in order to maximize profit. That’s what corporations do. The only way they’re finding greater profit when raising prices is because the consumer is willing and able to pay the higher prices. They’re always doing this.
"Greedflation" appears to be a significant part of it.
Companies used the real rising inflation rate as an excuse to raise prices much higher than necessary. The additional profits were clearly visible on their balance sheets.
> Half of recent US inflation due to high corporate profits, report finds
> "Greedflation" appears to be a significant part of it.
Are you saying greed is a recent phenomenon? Companies were not greedy before?
In that case, here's a question for you. How much money do you think the Fed injected in the economy between the start of Covid (March 2020) until the peak of the inflation (June 2022)? Everyone knows it was a lot of money, but how much? One trillion, two, three?
If you said $4.8 trillion, then you were right [1]. That's about $15k per person in the US. Or about $45k per household.
Do you think this might have something to do with the inflation?
Given that Walmart operates a marketplace like Amazon, there's a good chance that some of the items were not sold by Walmart directly and were instead sold by third party sellers at extortionate prices.
Right but the OP wasn't clear about what "cart" exactly entailed. You could place grocery orders online and have marketplace vendors' items in the same cart. The phrase "4-year old saved cart" also suggests it's online rather than in-store, because it's trivial to save carts online but non-trivial to do so in-store. Moreover none of the subcategories for food in the CPI is anywhere near 2x, so I suspect something else at play than just "prices going up"
The farmgate price of food had doubled or more at its peak in 2022, due to several factors affecting the global supply of food. Production is largely back on track now and the price has since crashed.
Food is generally sold on futures contracts so it wouldn’t be surprising to see the retail price lag behind. What is the usual lag time in the market?
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[ 2.8 ms ] story [ 57.9 ms ] threadIt’s not surprising that retail reacted to that, and not immediately. Markets can be slow. The end consumer seems to be always the slowest to react, so it is no doubt the residual effects of those events.
Inflation measures the change in value of the currency. This was a change in value of food - the threat of starvation saw people see food as being more valuable. What the parent meant is that it isn’t just inflation alone. Inflation is partially responsible, but not wholly so.
It is really quite amazing that it was as short-lived as it was (on the wholesale side, at least).
>In economics, inflation is a general increase in the prices of goods and services in an economy.
Even if you use a definition like "anything above the overall inflation rate", it becomes self-circular when the goods itself is in the inflation basket. Not all goods in the basket will have the same inflation rate, and the basket is the weighted average of all the goods, so they'll always be items that are above the overall inflation rate.
You see this in the housing rental in constrained markets. When the minimum wage increases, the landlords can all just increase their rents, and the renters, with high moving costs, just pay. All the landlords do this, and eventually all the minimum wage gain is absorbed by the landlords. Makes me cynical that raising the minimum wage does anything other than drive inflation in the rental market. There are likely better policies to increase the quality of life of the bottom 50% than increasing the minimum wage, but our politicians have that lever, and get votes when they use it.
The trope that the stimulus made poor people rich and thus able to spend more is farcical.
It's greed pure and simple. First they blamed covid, then supply constraints, then they just stopped with the excuses as people just assumed this is how it is now.
Also, landlords have increased rents exponentially without an increase to minimum wage.
Companies used the real rising inflation rate as an excuse to raise prices much higher than necessary. The additional profits were clearly visible on their balance sheets.
> Half of recent US inflation due to high corporate profits, report finds
https://www.theguardian.com/business/2024/jan/19/us-inflatio...
And in the EU:
> The biggest study of ‘greedflation’ yet looked at 1,300 corporations to find many of them were lying to you about inflation
https://fortune.com/europe/2023/12/08/greedflation-study/ https://fortune.com/europe/2023/12/08/greedflation-study/
Are you saying greed is a recent phenomenon? Companies were not greedy before?
In that case, here's a question for you. How much money do you think the Fed injected in the economy between the start of Covid (March 2020) until the peak of the inflation (June 2022)? Everyone knows it was a lot of money, but how much? One trillion, two, three?
If you said $4.8 trillion, then you were right [1]. That's about $15k per person in the US. Or about $45k per household.
Do you think this might have something to do with the inflation?
[1] https://fred.stlouisfed.org/series/WALCL
Nowhere did I say that. Rising inflation gave cover for existing greed to do its thing. It doesn't seem that complicated or hard to predict.
Food is generally sold on futures contracts so it wouldn’t be surprising to see the retail price lag behind. What is the usual lag time in the market?