
US food prices see historic jump and are likely to stay high - harambae
https://apnews.com/54f1efe0afa71b0a939fda91cf917366
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robbyt
This sounds like inflation. Didn't the economics say there wouldn't be
any/much as a result of printing so much money?

~~~
dragonwriter
> This sounds like inflation.

General inflation would, by definition, extend beyond food prices.

Of course, it is, by definition, inflation in that specific sector.

> Didn't the economics say there wouldn't be any/much as a result of printing
> so much money?

And there isn't much sign of general inflation, which is what you'd expect if
the key driver were money supply.

~~~
pdonis
_> there isn't much sign of general inflation, which is what you'd expect if
the key driver were money supply._

It's too early for much of the newly printed money to have spread out into the
economy. We won't know how much inflation printing the money caused for some
years, since it will take a while for the rest of the economy to adjust to the
new money supply.

~~~
dragonwriter
> It's too early for much of the newly printed money to have spread out into
> the economy

No, it's not, though if it was that would be another argument against the
claim that food prices were an effect of monetart-policy-driven inflation.

> We won't know how much inflation printing the money caused for some years

If monetary policy had that much lag there'd be little point to it at all.

~~~
pdonis
_> No, it's not_

Why not? Money doesn't instantly magically transport itself to all parts of
the economy. First the people who get the printed money have to spend it--and
many of them haven't even gotten it yet. Then the ripple effects of the
spending have to propagate through the rest of the economy. That can take a
while.

 _> if it was that would be another argument against the claim that food
prices were an effect of monetart-policy-driven inflation_

At this point in time I would agree; there hasn't been enough time for people
to have spent enough of the printed money on food.

However, since a fair chunk of the printed money is going to people who need
it for basic living expenses, I would expect a fair chunk of it to be spent on
food over the next few months, which will probably drive food prices up
further--or will offset at least some of the price decreases to be expected as
supply chains adjust.

 _> If monetary policy had that much lag there'd be little point to it at
all._

This would come as a great surprise to the Federal Reserve board members and
all of the economists who are always pointing out that the Fed has to base
policy on estimates of what things will be like some time in the future, since
monetary policy has a time lag. Try Google searching on "federal reserve
monetary policy time lag" and see what hits come up.

~~~
dragonwriter
> Try Google searching on "federal reserve monetary policy time lag" and see
> what hits come up.

Funny that when I did that I found pieces saying exactly what I already knew:
that monetary policy changes tend to measurable effects quickly but still take
a significant time to reach their peak effect (6-8 quarters), which is what
the “policy lag” refers to, and then have reduced effect past that point.

Policy lag _doesn 't_ mean that it takes a long time for monetary policy to
_start_ having noticeable impacts, which is what was suggested.

~~~
pdonis
_> monetary policy changes tend to measurable effects quickly_

Measureable effects on _interest rates_ quickly. The reason for that is
simple: the interest rates that are measured are usually tied directly to the
Fed's rates (usually with an offset that depends on the particular kind of
loan) and thus move with them.

But we're not talking about interest rates here. We're talking about prices of
commodities like food, which are part of the things that "lag".

 _> it takes a long time for monetary policy to start having noticeable
impacts, which is what was suggested._

What was suggested is that it takes time for monetary policy to start having
noticeable impacts on _food prices_ (and more generally prices of
commodities).

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claudeganon
Has anyone squared the circle on why food prices are rising in spite of
collapsed restaurant demand? I understand the constraints around meat packing
(although given the monopolies in meat production, I’m still a little
skeptical that it’s all based in reality), but why other goods?

~~~
chiph
One reason is that the food supply system is comprised of retail and
commercial sectors. The commercial demand collapsed as restaurants &
institutions closed, while the demand at the retail level skyrocketed when
people panic-shopped.

The packaging needs of the two sectors are different - retail packaging must
have the nutrition & ingredients panels on it, while commercial packaging
would typically only have it on the carton.

~~~
mdorazio
To add on to this, the supply chains/logistics are somewhat different as well
on top of already-stressed delivery infrastructure, so there are multiple
bottlenecks in getting food to retail shelves. When demand skyrockets without
warning (like it did), it's not really possible to immediately scale up, so
you get shortages like we're seeing and thus food prices go up (temporarily)
like you would expect.

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wegs
I predicted we'd see rising prices for anything provided by essential workers:
food, shipping, etc. I think if the lockdowns and pandemic continues, we'll
continue to see that.

The limit case is everyone stays home. We print money to allow people to buy
food and medicine. Only essential workers contribute to the economy and do
productive work. In the limit case, we see high inflation, large economic
gains to essential workers, and a big hit to everyone else.

We're no where close to the limit case yet, but a modest rise is expected.
With a big chunk of our economy shut down, the food sector is bigger, in
relative terms.

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Simulacra
It sounds like they're raising prices in order to slow demand, so that the
system can catch up. I'm curious if this will lead suppliers, etc. to go back
to something like "just in time...but a few extra weeks just in case"

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jldugger
Before you get too worried:

> The Labor Department reports that the 2.6% jump in April food prices was the
> largest monthly increase in 46 years. Prices for meats, poultry, fish and
> eggs increased the most, rising 4.3%.

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kayhi
This statement worries me more in that this is a significant increase worth
noting.

~~~
jldugger
Food spending in general over the last 50+ years has represented an ever
decreasing portion of US household budgets:
[https://www.npr.org/sections/thesalt/2015/03/02/389578089/yo...](https://www.npr.org/sections/thesalt/2015/03/02/389578089/your-
grandparents-spent-more-of-their-money-on-food-than-you-do)

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koolhead17
Capitalism seems to thrive better along with pandemic.

