Insane Price Increases

[annabelle]

Speculators are not perpetual motion machines. They cannot drive up costs of goods (whether food or oil) for any considerable period of time unless the fundamentals of the underlying assets are also pushing towards increasing prices. That's why pump and dump scams are strictly short term cons. This is even more true in the case of food since the ultimate underlying asset is perishable and can not be driven up in price to the point where sale of the goods takes a long time.

Speculators are merely reacting to the fact that fundamental uncertainty is causing the prices in the markets to rise. The fact that half the middle east is on fire or exploding is causing the rise in oil costs because it has increased the risk that supply could be interrupted in the near future. The blame on the speculators is misplaced.

Exactly. Well said, BadRabbit. Add to all that the fact that we are at debt ceiling and Congress will surely monetize our debt. I hope everyone is prepared for the inflation that is going to hit us right around the holidays.

Tolliver: I apologize if I mislead. I was last in Tulare a year ago and it was dry and hot.

Edited June 10, 2011 by annabelle (log)

[heidih]

I only shop for one, vegetable garden, bake my own bread, and use the farmers market. I have to admit that I have not noticed such huge increases. Other than the mentioned bread and butter increases, what other items have been skyrocketing?

[BadRabbit]

I only shop for one, vegetable garden, bake my own bread, and use the farmers market. I have to admit that I have not noticed such huge increases. Other than the mentioned bread and butter increases, what other items have been skyrocketing?

I've also noticed that Mayo has gone up dramatically. The big jar of Hellman's was over $7 at my grocery the other day. Just 1 month ago it was $4.99.

[annabelle]

heidi, milk has increased hugely. Last summer $3.32 for a gallon of whole milk. This summer the same is $4.34. However, if you shop around, Braum's (an ice cream/dairy chain) has milk for around $3.79. Also, Walgreen's will have milk on sale for $2.99 (it was $2.79 last month) with a limit of 2 per customer.

Breads are higher, as well. A loaf of w/w bread is nearly $3.00. Flour tortillas are high at $2.89 for 10. Sugar is now sold in 4 pound sacks, but priced at the same rate as a 5 pound sack. Ground beef is up 32% since last summer. Cooking oil is 30% higher. Nuts have nearly doubled in price.

Many of the stores have nearly bare bones inventory, as well.

Edited June 10, 2011 by annabelle (log)

[Moopheus]

Speculators are merely reacting to the fact that fundamental uncertainty is causing the prices in the markets to rise.

Right-o. You don't think today's financial wizards are going to let a little thing like supply and demand stop them?

Sure, there's been instability in the middle east--triggered in part by rising food costs.

[BadRabbit]

Speculators are merely reacting to the fact that fundamental uncertainty is causing the prices in the markets to rise.

Right-o. You don't think today's financial wizards are going to let a little thing like supply and demand stop them?

Sure, there's been instability in the middle east--triggered in part by rising food costs.

I read that article when it came out and it is packed full of misconceptions and inaccuracies. It's fairly obvious that Kaufman is a journalist with little or no training in economics as evidenced by the fact that he doesn't even know what the word arbitrage means.

Edited June 10, 2011 by BadRabbit (log)

[OliverB]

Truckers or trucking companies have to pay more for diesel - a significant increase which IS due to speculators. And politicians whining about "more domestic drilling" are idiots because that oil does not stay in the U.S. It goes on the open market and is subject to manipulation by speculators the same as oil from Saudi Arabia or the North Sea.

(...)

Twenty years ago there were only a limited number of foodstuffs that were sold as "futures" now the speculators have gotten their crooked little fingers into almost everything and we have to pay for their profits.

That's exactly the reason for the higher prices. Just about anything is being handled by speculators nowadays. There's really no reason for the high gas prices, there is plenty oil available on the market, and they could easily put more out (as they just stated) but nobody wants/needs it, there's enough to go around (for now). I have to laugh at the drill drill drill people, it would have no influence on the price of oil or gas what so ever, as Andie states, it ALL goes into the international market ruled by speculators and the oil companies, and it goes to the highest bidder.

Taxes play a minor role, and here in NorCal I don't even pay sales tax on food items (unless it's prepared/processed ready to eat stuff).

The big money movers (not only on Wallstreet) are who controls these things now, since we've all relaxed the rules and oversight. (great idea, hu?)

Of course, higher energy prices (diesel, heating/cooling, manufacturing, etc etc) get rolled down to us as consumer.

The US also has some of the highest food prices in general. If I go shopping in Germany for exactly the same stuff I pay about 1/4th. Always astonishing (and bad for my waste line) when we're there once or twice a year. A lot of it is controlled and subsidized of course.

We actually still have pretty cheap gas here, in Germany it's about twice as expensive and a LOT of that is just taxes. But with the markets going wild, the oil companies raking in record wins, this is not going to change, not if you drill every single well you may find. They have a money printing machine, and they won't give it up. Would you? It's just what a less regulated market will do, go for the maximum possible profit.

[weinoo]

Interesting. So what food item have you paid an insane amount more for lately?

[heidih]

The 99 cent store here has corn and flour tortillas in I think 24 and 12 packs respectively as do the ethnic markets. I am in Los Angeles - perhaps there is a huge regional variation. I have always been amazed at the low cost of food. My sister in Sydney is agape when she visits. Specialty items of course may be way high. I pay $2 for a pound of decent generic butter at Smart & Final. I do not buy cereal, milk, and other common basics so perhaps those are harder hit. The last jar of peanut butter was around $3. I do see ridiculously wide variations in prices between markets for the same products. If it looks wrong I just get it elsewhere. That probably seems an arrogant statement to those in areas with less market selection. Competition versus control of market share may be a part of the equation.

[annabelle]

We don't have any ethnic markets or farmer's markets in our town. We do, however have two Dollar-type stores. I haven't been in either of them since my middle son went off to college a few years ago and I stocked him up with shower shoes and a few other dorm related items.

Be glad you don't buy cereals since they are priced at up to $5 a box if you are buying Kashi-type cereals. I generally buy what my youngest calls "homeless cereal", the malt-o-meal kind that comes in the plastic bags, for myself, and raisin bran for him, usually priced at about $3.50-$4.00.

I miss the ethnic markets in California. I lived there most of my life.

[nolnacs]

I've found this thread to be rather interesting (political ranting included) mostly because I haven't noticed this trend. Much like heidih, I do most of my shopping at the farmer's market and at local purveyors of meat, fish and produce. Prices are highly variable at the produce place I shop at, but they don't seem to be on average any higher than they were last year. Meat and seafood prices are mostly unchanged.

I do get sticker shock when I go to Superfresh to pick up staples like flour or cereal for my wife. I can't believe how expensive the packaged stuff is. And yet, I recently discovered that I can buy King Arthur flour cheaper at Target for less than I have ever been able to purchase it before. I'm also not seeing significant price increases on the items that I buy at Trader Joes - but again I'm not purchasing bread,frozen meals etc. Perhaps traditional supermarkets are more willing(must) pass on raw ingredient price increases to their customers than other retailers.

[LindaK]

The increased prices for fresh, non-farmed, fish have been striking. Even fish native to the region have become pricy. Fresh cod, for example, is now routinely $13-15 lb. Only a year or so ago, I was always able to get it for under $10 lb.

I understand there are many reasons for this--depleted supply from overfishing, catch limits on fishermen as part of fisheries management, fuel prices for fish brought in from elsewhere. It might not be as noticable in every part of the country. But here in New England, where fishing has historically been a local industry, it's caught me by surprise that even the prices of "local" fish have increased so much.