Tag Archives: inflation

About Those True But Wrong Inflation Stats:

While the one-sentence so-called top line inflation numbers the media reports are accurate, they’re also totally false. Here’s one of the best recent examples:

The Council of Economic Advisers issued a statement in November that this years’ average family turkey thanksgiving dinner was down by 5%! A great reinforcement to politicians stating that inflation is back under control. Nothing to see here – move on.

Not so fast: That same calculation of the cost of thanksgiving dinner in 2023 was UP 15% from two years prior and UP 20% from three years before.

Inflation stats are released for the prior month and is used as a 12-month floating average. The biggest wave of inflation was in the time period of August 2022 to July 2023. That’s all baked in and will never go away. But since then, inflation has slowed down. But that’s “new” or “further” inflation and now doesn’t include calculations of what happened more than a year ago.

Politicians, especially in the US, can’t understand why people aren’t feeling great about the economy. After all, inflation is under 3% and everything is great again. It’s a total disconnect between reading stats and going to the grocery store to buy stuff that’s a whole lot more expensive. But a story that it’s really expensive now but not getting worse just isn’t ever sexy.

If something was priced at $10 in 2022 and went up 20%, the price became $12. To now tell people that inflation is “only” 3% is telling you that the new $12 price is now $12.36. That’s not a decrease – it’s a slower increase. There’s an old saying: Statistics don’t lie, but liars sure can use statistics. It doesn’t help that reporters that parrot the monthly stats are either lazy or overworked. That’s why we get the one-sentence newscast line that: Inflation is now under 3% without the context or reminder that the other 20% (average) or upwards of 50% (food) is still in there.

My Biggest Ever Price Gauging

Yes, grocery prices are all up – a lot. But how much of it is legitimate and how much of it is just simply price gauging – or at least increasing mark-ups to a much higher profit margin?

Sure, it’s always done with “inflation” and “everything is more expensive” as an excuse. Just like COVID was the excuse for a ton of bad behaviors, customer no-service, etc. for most businesses.

For a few years, this (and other flavours) 1 litre juice was $1 at President’s Choice (Loblaw/No Name store). When it increased to $1.25 two months ago, I was surprised at a 25% increase, but wrote that off to inflation. This past week, the price changed to $2.25. That isn’t inflation. A 225% price increase is the largest price gauging I’ve ever seen. Of course, I’m not buying it. Of the top 10 things I buy all the time, I’ve now replaced 9 of them. But I wonder how many people think “it’s only an extra buck and a quarter…. Since Loblaws just announced record profits for the last quarter, I’m guessing there are enough people who just shake their heads and buy anyway…

Oh, and Dollar Tree (and likely all other chains) now have a base price of $1.50 – up from $1.25 last year. At least that “seems” like a reasonable inflation increase.

Lastly, if you ever need to get emergency air into your tires at a gas station, air is also subject to inflation. Who knew air doubled in price? Yes, it’s now a toonie for “air”!

Another Grocery Price Hike? Make It Stop

Sometimes to my detriment, my personality type is that I’m very loyal and a creature of habit. However, when it comes to the regular items I buy in the grocery stores, that’s come to an end this year.

Sure, there’s grocery inflation, but there’s also a lot of “taking advantage” and outright price gauging. I don’t know what’s what, but I do know when to say enough is enough and switch brands. That’s actually not hard to do, but you first need to acknowledge that you have a loyalty problem and that other substitute products are likely just as good…and a lot less expensive.

Whether it’s habit or your budget, if you stop buying the products that have gone up a seemingly unreasonable amount, and enough other people do the same, the price will come back down. It’s simple economics 101 of supply and demand.

For me, it’s these items that I’ve had to say goodbye to – but have found other substitutes just as good:

Walmart Becel margarine up 30% (6.45 to 8.99)

Costco Pita Bites up 30%

Loblaw (No Name) Suraj mango juice up 60% (1.25 to 2.00)

Loblaw (Presidents Choice) Belgian waffles up 30% (5.00 to 6.50)

Walmart Great value wafers up 40% (1.00 to 1.40)

Costco Almond crunch cereal up 40% (10 to 14)

Sorry Okanagan

One of the top five things I miss about living in the Okanagan is fresh Okanagan fruit. I miss the days of picking cherries, buying strawberries, or being able to get a few peaches at the side of the road.

There hasn’t been a year when I haven’t bought a bunch throughout the summer and fall – until this year. Last week one of the discount grocery chains had Mexico and BC peaches. The prices of the Mexican peaches was half as much as the “local” BC ones.

Yesterday I was at my local grocery store which had a big display of “flyer special” Okanagan cherries. Hurray…or so I thought. This pre-packaged bag of cherries might have been 50 of them – tops.

Fast forward to the checkout cashier a few minutes later. She looked at the cherries – she looked at me – she scanned them through. I thought the “look” was kind of weird but it made perfect sense when I saw $11.65 show up on her screen! WHAT? Take those off, please. Her response was: I don’t blame you – you’re not the first one…

Sorry, Okanagan. I don’t know who is getting the money, but I’m quite sure it’s not the orchard owners! According to the store cashier: Add me to the list of people who certainly can’t afford or justify spending almost 12 dollars for around 50 cherries.

Blame It On the Rain

That was the name of a song by a late 80’s R&B duo called Milli Vanilli. It turned out that they were just lip-synching – including their appearance at the Grammy Awards. In the worlds of one of the group “we were in constant fear of being discovered.”

The group didn’t last, but the blame-game and flagrant misleading (OK, lying) is alive and well. It happened within a month of the Covid pandemic in March of 2020 with a lot of businesses blaming Covid for anything and everything.

Within 10 days of the Russian invasion of Ukraine, US President Biden was blaming rising gas prices on Russia calling it the “Putin price increase.” It’s total b.s. and a poll done last week showed that less than six percent of respondents blame Russia, but the line keeps getting used. Oil was already around $90 a barrel before the war, then went to around $100. Nice try, President Biden. But someone has to be blamed when people get mad.

Politicians have no control over oil prices or supply chain issues. They also don’t have control over the weather tomorrow – honestly! Sure, in the US, voters can blame President Biden for not even getting his calls answered or messages returned by the Saudi government for weeks at a time. Oil is a world-wide commodity. The only way the price drops is when the supply exceeds the demand as every person would have seen in the past two years. Cut the demand of any product and the price drops. Increase the demand without more product and the price jumps until equilibrium is reached again. Economics 101.

But whichever party is not in power blames the current administration and claims they would deal with this. You know it’s b.s. when they don’t actually tell you anything about how they would do that. Yet it works. The current party blames someone – anyone while the opposition blames the government.

Milli Vanilli may have been in constant fear of being discovered, but sadly, businesses and politicians don’t have those same morals when it comes to blame, excuses, evading responsibility or the likes. Stuck in between are the voters who don’t really care who is to blame, but care a lot that it’s addressed. Or at least that someone understands.

BIG Inflation or Temporary Blip?

That’s the question most economists are asking themselves. So is the Bank of Canada and the U.S. Federal Reserve in order to set interest rates.

Add my vote to those predicting the spike in inflation is temporary and only part of the post pandemic recovery. Pent up demand will do that – but it woudn’t or shouldn’t last. One of the measurements has already shown that. Lumber prices have collapsed to their 2020 levels or lower (but only in the U.S. so far). So have copper, crops and gold prices. If inflation where heading up, those would be among the first places to show it.

Yes, energy, food, and housing are still way up. But remember that these are essentially monopoly pricing areas. Without real competition to bring down prices, normal market forces of demand and supply don’t apply as much – or rapidly. OPEC sets oil prices, as one example. And in the housing market, a new report shows that 85% of condo sales in Canada are to investors. Food prices (already down in the U.S. as well) go up instantly here in Canada (even though our dollar is pretty strong at around 80 cents). But most cities have only two major competitors. Thus it doesn’t take much for them to pass on price increases, but they seem to “forget” to roll them back when costs go down – way down.