food prices

Food Prices Continue To Rise

May 16, 2021 By Max Erkiletian Leave a Comment

It started with empty spots on grocery store shelves amid the pandemic. As a result, food prices soared. Now, with vaccinations up and COVID-19 infections down, you might think those prices would be down.

However, grocery prices continue their upward trajectory.

Research firm NielsenIQ reports that seafood has climbed 18.7 percent while baked goods have increased 7.5 percent in the 13 week period ended April 24.

Grocery store prices overall are up 3.3 percent from March 2020 to March 2021, according to the U. S. Department of Agriculture (USDA). If you ordered from a restaurant during that time, your meal costs rose 3.7 percent.

Consumer Price Index Increase

The Consumer Price Index (CPI) rose last month to 4.2 percent over the previous April. That is the highest inflation rate since September 2008. Most importantly, the core CPI, which tracks food and energy prices rose 0.9 percent. Consequently, that was 0.6 percent above projections.

Short-Term Volatility

Food prices can move almost instantly with a change in weather, geopolitics, social unrest, and a variety of other factors.

A combination of events has come together to impact current food prices.

Oil and Supply Chain

Gasoline is used to fuel everything from tractors used in the planting and harvesting of grains, vegetables, and fruit to delivery of those products in addition to meat and fish. As a result, any price increase in oil contributes to price increases in food.

In addition to gas prices, problems in the supply chain impact not only food prices but other grocery store items. For instance, remember the toilet paper shortage?

Climate Change

Extreme weather events, as well as gradual changes, have had an impact on the food supply. The most recent major weather event is the winter storm that wreaked havoc deep into Texas.

The immediate impact of that storm was knocking out the power grid. That left people without heat and electricity as temperatures dropped to record lows. However, the long-term impact has slashed the supply of many food sources.

Losses from that one storm have been estimated at $600 million. Of that, $14 million in milk, cattle, and poultry were lost. In addition, a vast array of fruits and vegetables were destroyed.

Government Supplements

Government policy has had some effect on food costs by driving up corn prices. More corn is going into fuel tanks. As a result, less is going into stomachs.

The U. S. government pays subsidies to use corm for biofuels. As a result, the price of corn has risen and there is less corn to eat. The creation of ethanol consumes 37 percent of the nation’s corn. That’s more than six times the amount used in 2000.

The Pandemic

You’ve heard it before, but it bears repeating. The pandemic upended the food supply and helped drive up the cost of food and many other goods.

The pandemic accelerated in March of last year. Many states and cities instituted safety measures that lead to more people eating at home more often. That increased the demand for groceries. Meanwhile, nations began closing their borders to limit the spread of COVID-19. That disrupted shipping which further limited the food supply. As a result, prices went higher.

Limited Stockpiles

The World Trade Organization (WTO) limits the amount certain foods, such as corn and wheat, can be stockpiled. That policy is designed to level the playing field between countries that subsidize farmers and those that do not. This policy is effective in times of abundance. However, it worsens the problem during shortages.

Rising Meat Prices

Another factor increasing food prices is an increase in meat consumption – especially pork. People around the world are becoming more affluent. As a result, those who could not afford meat a few years ago now can.

So, you say, just raise more animals. Fine, but the animals you want to eat have to eat as well. That leads to a need for more grain. That increase in demand raises grain prices even more. That leads to higher meat prices.

The Darkness Before The Dawn

Reading all the above and watching prices climb at the grocery may lead you to think the solution is simply not to eat. That’s been tried and most agree the results are not satisfactory.

Take heart, the high prices we are experiencing today and, perhaps, for the rest of the year are not permanent.

USDA Predictions

The Department of Agriculture is expecting grocery prices to rise another one to two percent in 2021, before stabilizing as the pandemic passes. Restaurant food costs will grow by another two to three percent, says the USDA.

The Agriculture Department is even predicting beef and veal prices will drop between 1.5 to 2.5 percent by the end of the year.

Of course, the USDA projections can not predict whether a hurricane, tornado, flood or other natural disasters will disrupt the food supply.

Conclusion

There are many things you can not do about food prices. You can not increase grain yields, cut transportation costs, or change the weather. However, you are not powerless. You can exercise a plan of action to minimize the effects of rising food prices.

There are many sources for inexpensive recipes online and in publications. You can also set a budget and stick to it. Here are some other ideas for fighting food costs.

If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started. Check out these helpful tools to help you save more. For investing advice, visit The Motley Fool.

Weekly Financial Wrap: Jobs, Stocks, Govcoin, Food Prices, Office Perks

May 15, 2021 By Max Erkiletian Leave a Comment

Why Did Stock Explode When Jobs Bombed?

April’s jobs report was lower than expected, but Wall Street didn’t care.

The U. S. economy produced only 266,000 new jobs in April. The private sector added 218,000 jobs. Meanwhile, government employment rose by 48,000. As a result, unemployment moved from 6 to 6.1 percent.

Stocks React

Following the release of the jobs numbers, all the major exchanges posted gains. The Nasdaq moved up 1.1 percent, the S&P 500 gained .7 percent, and the Dow rose .4 percent.

The jobs report had no impact on the markets. So, what caused them to move up? Inflation fears were eased. However, since that time some inflation concerns have increased stock volatility.

Federal Reserve (Fed) Chair Jerome Powell said he would want to see several strong jobs reports back-to-back before reducing Fed treasury purchases. As a result, the 10 year Treasury yield fell three basis points to 1.54 percent immediately after the jobs report.

Why Jobs Did Not Meet Expectations

Some speculate that federally enhanced unemployment benefits have caused unemployed people to shun work. So far, 11 states, Alabama, Arkansas, Idaho, Iowa, Mississippi, Missouri, Montana, North Dakota, South Carolina, Tennessee, and Wyoming, have announced they will bar residents from accepting federal unemployment checks in June or July. The program is scheduled to terminate on September 6.

However, economists and Biden administration officials discount that argument. They cite a shortage of workers with qualified skills for some jobs. In addition, some employees may still be concerned about safety.

“It’s clear that there are people who are not ready and able to go back into the labor force,” Treasury Secretary Janet Yellen told reporters, citing parents whose children are still learning remotely. “I don’t think the addition to unemployment compensation is really the factor that is making a difference.”

A Closer Look

Data released in the Labor Department report shows some interesting causes for the modist jobs performance.

Automobile and parts manufacturers cut 27,000 jobs last month. This has been linked to the semiconductor chip shortage and supply chain problems.

There were significant gains in the hospitality industry. Hotels added 54,400 jobs. In addition, bars and restaurants hired 187,000 people. However, food and liquor stores dropped 49,400 jobs. Both may be the result of the easing of pandemic restrictions.

Delivery services is another area where the reduction in COVID-19 fears made an impact. Currier and delivery service reduced employment by 77,400.

Bottom Line

According to the Labor Department, 9.8 million Americans are out of work. That is a high number, but far below the 23.1 million in April last year.

As President Biden said following the report, “Our efforts are starting to work. But the climb is steep and we still have a long way to go.”

Grocery Prices Rising

The old question was – which came first the chicken or the egg? Now, it might be – which costs more?

SA will look at why the cost of groceries is going up in Sunday’s focus article.

Govcoins Coming

The sustainability of cryptocurrencies and their challenge to the currencies of central banks is forcing national governments to enter the world of digital money. As a result, we are in the middle of history that will likely be studied for centuries.

The New Money

The rise of cryptocurrencies is creating a decentralized world of finance. However, since they also challenge conventional currencies, more governments are planning to issue their own cryptocurrencies.

Called Govcoins, these state-produced cryptocurrencies promise to make digital currencies work more efficiently and reliably. However, they may dramatically change how retail banks operate or threaten their existence.

Central Banks

Govcoins would be created and processed through central banks, such as the Federal Reserve Bank, Bank of England, or other national banks. That would give such institutions control over the digital currency. The influence of networks and individuals would be reduced or eliminated.

Instead of having a checking or savings account with your local bank, your Govcoin would be in a central bank. Transactions would be processed through a payment app.

That could lead to individuals and businesses leaving their digital funds in the central bank. As a result, your local bank might not have money to make loans.

Threat to American Influence in the World

Today, the world’s reserve currency is the U. S. dollar. That is strengthened by America’s open capital markets. However, cryptocurrencies have the potential to upend the dollar’s dominance by offering an alternative means of moving payments across borders.

If U. S. policymakers want to preserve that dominance, they may have to establish an American Govcoin.

A Long Way To Go

Over 50 countries are researching and some are implementing digital currencies. China has introduced a limited version of the e-yuan; the European Union is planning an e-euro by 2025 and America is exploring an e-dollar.

The technical challenges of a nation issuing a cryptocurrency are relatively simple. The great questions are how to preserve individual privacy and what role central and retail banks will play in the future. Historic times indeed.

New Office Perks

Most major employers are offering vaccines and changing workspaces to increase employee safety and promote a return to the office. However, some companies are going a leap further.

CoStar, an analytical and research service company. is offering workers who return to the office the chance to win a Tesla Model S. However if cars are not that enticing, they are also offering $10,000 in cash and a trip to Barbados.

The incentive program was conceived soon after CoStar offered COVID-19 vaccines to employees. Even with the vaccine, many employees were reluctant to get back in the office. However, with the chance to win one of the big prices, over 30 percent of the workforce has returned to CoStar offices.

Cash Bonus For Taking Vacation

Another weird new employee benefit arising from the pandemic has employees getting a bonus to take vacation time.

Many employees working from home have not made use of vacation time. That has created a logjam of time off for many employers. As a result, some have resorted to unusual measures to induce employees to take a break.

PricewaterhouseCoopers (PwC), a global assurance and consulting firm, is paying employees $250 for every week of vacation they book for the next year up to $1,000. Meanwhile, other companies, such as Google, are giving employees an additional vacation day for booking time off.

Six Supermarket Saving Secrets

September 21, 2008 By Joe Morgan 7 Comments

Your grocery bill is likely one of the largest parts of your living expenses. If you were to rank them from largest to smallest, it would probably fall just after mortgage (or rent), energy and car payments. You can’t do much to lower a mortgage payment or car payment, so trimming as much as you can from your weekly food bill makes a lot of sense.

The problem is that we have seen food prices skyrocket, about as much as fuel prices over the past year, and it’s taking an ever bigger bite out of our budgets. Here are some supermarket savings tips I’ve collected over the years of raising a family of four on a single income. Don’t fret, they should work regardless of the number of mouths you feed or the income you have.

Know the numbers

Much of our supermarket spending is influenced by sneaky marketing tactics. But you most likely already knew that. The good news is that if you arm yourself with the facts, you can shield yourself and nullify these tactics. Comparison shop, so you know you’re getting the best price. Don’t buy everything at one store. Most locations have at least 2 or 3 supermarkets clustered within half a mile of each other. Pick the 2 that most constantly have low prices or the best sales on the items you buy. Once you have your target destinations, make sure you make heavy use of coupons and buy expensive items when they’re on sale.

Speaking of sales, make sure it really is a sale. Do the math. If you need to buy 2 items to get 1 free, it’s only a sale if you can use all 3. Another marketing trick is the incredible shrinking portion size. This is a relatively new phenomenon, caused by the recent return of inflation. Food producers are facing a dilemma: do they pass along the increased cost of production, or cut costs? Many companies are opting for the latter. The result is you pay the same price for that half gallon of ice-cream, only now it’s not quite a half gallon anymore.

Know the system

Be prepared and have a plan. Make a list and stick to it. That way you maintain control, and don’t fall into the impulsive shopper traps. Most grocery stores charge more for items that aren’t on sale, hoping to lure you in with the sale items and make up the difference on the non-sale items. These sale items are known as “loss leaders” in the biz because the store often loses money on them in the hopes it will lead you to spend more on the non-sale items.

Loss leaders are your friend. Take the store up on their loss (sale items), but don’t follow their lead and buy the higher priced non-sale items. Wait and buy non-sale items at other stores where the price is better. Once you know you about this trick, you’ll make out like Bonnie and Clyde (except you probably won’t get shot by a Texas posse).

Buy right

The cheapest price isn’t always the lowest. You read right. Sometimes you think you’re doing the right thing by comparing 2 similar items, and buying the one with the lowest price. But it’s not the price that matters for some items – it’s the price per unit. This is usually displayed on the shelf above or below the item, right next to the total price. The unit price is like a price per volume, and it’s helpful in deciphering the best price for items from cereal to potato salad. Unit price is particularly obvious when comparing the brand name product to the store brand (generic) product. Buy generic when you can for most items. Substituting store brand antacids for Tums, probably won’t make a difference but you’ll spend a lot less. Some things however just don’t work as generic. Mayonnaise comes to mind – there is just no substitute for Hellman’s.

Don’t overlook the basics

You’ve read them before, but they bear repeating: Never shop hungry and stock up on non-perishables when they’re on sale. You can save a bundle on stock piling non-perishables. I constantly tease my wife about having enough shampoo to last until the next millennium, but she’s constantly getting them buy 1, get 1 free and using a coupon to boot. The result is 2 bottles of shampoo for about 75% of the cost of 1 bottle.

Do your homework

Another great way to save on groceries is to plan a menu of meals for the week based on the items on sale that week. For example, if chicken breasts are on sale, plan a meal around chicken breasts. This is especially effective when you can apply coupons toward the sale items. But your homework goes beyond menu planning. Keep a price book. A price book is simply a list of common items you buy and the average price of those items at 2 -3 grocery stores you frequent. This way, if you are tempted to buy something that is not on sale, you can do quick look-up in your price book to see if it’s still a good price or if you can get it cheaper at another store.

Use the corner store

I know some people say you should avoid the corner store, and this is largely true, but if they have a better price for staples like milk or bread – go for it. For example, Stewart’s is a regional convenience store where I live. There’s a Stewart’s on just about every corner and they consistently have the best price on milk. Not only that – their milk is produced on local farms and is constantly voted the best milk in the state by the leading university of agriculture. Buying milk from Stewart’s also supports the local farm community. Couple that with a milk club card, which gets you a half-priced gallon of milk for every 5 you buy, and you’d be a fool to pass this by.

My wife and I have managed to feed our family of four on just a little over $110 per week using these tips. Well, OK I admit: it’s really my wife. But I am very appreciative of her hard work and concerted effort in keeping the food costs to a minimum.

Image courtesy of Thomas Hawk

Are You Really Worse Off or Does It Just Seem That Way?

July 22, 2008 By Jennifer Derrick 18 Comments

Like any good financial nerd, I spend a lot of time watching and reading the media’s coverage of the economy. Over the last few months the tone has gone from mildly concerned, through concerned, and on to full blown panic. This amuses me because you can literally watch the rhetoric ratchet up and up, sometimes from one extreme to the other in a single day. One station or paper reports things as “troublesome” then the next paper or station has to go one better and reports things as “worrisome.” Then the next one has to make it sound still scarier, so they go with “deeply concerning.” And on it goes until everyone is tossing out words like “panic,” “fear,” “depression,” “doom,” and “collapse.”

Of course this works its way into our psyches. We hear of things being “troublesome” and we begin to think, “Hey, maybe something’s wrong.” Then, by the time the media gets to “collapse” and “depression” our moods have followed suit. We become scared and panicky, thinking our personal finances must now be in free fall. We start canceling vacations, hoarding food, postponing needed household repairs and so on. All because we’re terrified that we’re heading for economic doom.

The question is: Are we concerned because we have a genuine need to be, or because the media tells us to be? I think, for a lot of people, it’s the latter. We watch the news and we hear about the troubles some people are having. We hear about “record inflation,” the “pain at the pump,” and the “mortgage meltdown,” and we think, “Boy, things are so bad. I’d better take drastic measures.” Then we panic. But are your personal finances in that much trouble? Are things really that much different for you than they were a year ago, or does it just seem that way because the media makes you feel that you should be suffering?

Here’s how to get a reality check. First, turn off the TV and stop reading the newspaper for a week. Just tune it all out. Give your brain a break from the relentless hype. This alone will give you much needed perspective. Without someone telling you how much pain you should be in, how everyone around you is suffering, how the world is collapsing, etc., you’ll probably feel better. Those things may be the case for some people, but if you look at your individual, personal life and circumstances, it probably isn’t the case for you.

Then take a look at your finances and compare it to the media coverage.

Mortgage meltdown got you worried?

Think about that. Do you need to sell your house right now? If the answer is no, then you’ve got nothing to worry about. By the time you’re ready to sell you’ll probably have no trouble because the market will have straightened out by then. Are you looking to buy? If you have good credit you shouldn’t have any trouble getting a mortgage and it’s a buyers market. Think about where you live. Is your area really losing that much value? Only a handful of places are seeing the severe losses that the media likes to cover. The rest of the country is either losing only slightly, stable, or even gaining modestly-all of which is normal.

The only people who need to really sweat the mortgage mess are those who over-invested in mortgages, those who need to sell in a hurry and can’t afford the loss, those who live in a grossly over-inflated area, those who are looking to buy but don’t have the best credit, and those who have adjustable rate loans that they now can’t afford. If this isn’t you, you really don’t have much to worry about.

Rising fuel prices freaking you out?

This one’s a little tougher, but you can still ratchet the worry level down. Do you drive a gas hogging vehicle? If the answer is no, then you can probably relax, at least compared to the guy with three Excursions in the driveway. Think about it this way: Assume you have a 20 gallon tank in your car. If gas is $3/gallon, it costs you $60 to fill up. If gas is $4/gallon, it costs you $80 to fill up. It’s only $20, yet many people run around acting as if it’s $200. I don’t deny that it hurts but really, $20 is a meal out, a NetFlix subscription, some magazine subscriptions, a book, or a couple of DVD’s. In other words, if it really hurts your budget, there are probably places you can trim or habits you can change (carpool, combining trips, etc.) to make up the difference. Do you have to drive a lot (have to, not want to or choose to)? If the answer is no, then rising fuel prices aren’t a big concern to you.

The people who are really hurting from the high fuel prices are those on the lower end of the economic spectrum and those with huge debt loads that are challenged by any little increase in the price of anything. People who drive huge vehicles are hurting, as are those who have to or choose to drive long distances to work or to chauffeur half the neighborhood around the city to various activities. If this isn’t you, you can probably relax a bit. It stinks, but it isn’t killing you.

Are grocery prices making you panic?

This is much the same as fuel prices. Unless you are living close to the edge, you can probably absorb the increase or at least change your shopping habits to cover the difference. Coupons, shopping the sales, shopping at less expensive stores, and buying store brands are just a few of the ways you can compensate for rising prices if you have to. Those who really have to worry about this are people who are already doing all they can to save on food and don’t have the cushion to absorb the extra. If you’ve got some breathing room in your budget and an ability to reduce your spending, then this is not a huge concern to you. It’s a pain in the rear, but it isn’t going to drive you into bankruptcy.

Are you worried about your retirement accounts or investments? Ask yourself this question: Do I need the money right now? If the answer is no, you’ve got time for the market to recover. You’re buying at a good time (stocks are cheap) and when the market rebounds, your accounts will rebound, too. The people who need to worry are those who plan to retire in the very near future or who need the money right now. If this isn’t you, or if you’ve already taken steps to move your money to more stable investments, just sit back, relax, and let nature take its course.

Worried about layoffs?

Take a good look at your company or business. Is it stable? Under good leadership? Making money? In an industry that’s not volatile? In an industry that’s necessary and difficult to outsource? If the answers are yes, you can probably take the worry down a notch. There are no guarantees, but certain industries are being hit much harder than others. If yours isn’t one of them, you can probably relax.

Thinking of canceling a vacation or putting off some home renovations or some other large purchase?

Ask yourself why. Are you doing it because you’ve taken a long hard look at your finances and discovered you can’t afford it, or because “everyone else is feeling pain, so I must be, too.” If it’s the former, good for you for choosing the responsible option. If it’s the latter, take a closer look at your situation. Do you have an emergency fund in place? Do you have reason to believe that you will have a job for the foreseeable future? Can you pay cash for the item in question without going into debt? Would doing/having it make you happy? If the answers are yes, then go ahead and take that trip or buy that item. If you can afford it there’s no need to suffer needlessly just because the media tells you that you should be feeling pain.

Whichever financial horror story has you worried, take it out and really examine how it relates to your life, not what the media says you should be experiencing. I recently told a friend that I “see” certain economic problems in our budget, but I don’t “feel” them. Every month when I input everything into Quicken, I can see certain categories becoming larger chunks of our spending. For example, auto, including fuel, used to be about tenth on the list. As of last month it’s crept up to fifth. But everything else is holding pretty steady, either because I’ve found ways to cut costs in those areas or because they aren’t real problems where I live. So I can “see” the problems, but I don’t “feel” them the way the media says I should because I can mitigate the damage or draw from other areas. Or it’s just not an issue in my part of the country. In fact, our net worth has actually grown by 20 percent since this time last year. We live well below our means, so there’s quite a bit of room before we feel pain. The media’s drama is not reflective of my life so I refuse to give in to it and panic for no reason.

I watch the media because I’m a financial nerd and I learn things that I can use for my writing. But I also take what they say with a grain of salt because I know they exaggerate and that not everything applies to me. I’ve learned how to evaluate my own circumstances and determine what I genuinely need to be concerned about and what is hype that isn’t affecting me. Everyone is different and you might have to worry about things that I do not, but take the time to determine what your level of worry needs to be before you let the media dictate it to you. And unless you enjoy the media, turn it off, tune it out, and see if you don’t feel better. You’ll probably realize that things in your own personal world aren’t as bad as the media would have you believe and you can go about your daily life without the added drama.