Why do the “official” numbers on food inflation state it’s gone up by tiny amounts like 8%, 19%, 11%, etc. but most of the foods I see has gone up by a minimum of 50%, 100%, 80%?
In: Economics
Is food up 50% from the price last year? Or is it up 50% from the price a few years ago?
If the food you buy went up 10% every year (just as an example), it would now be almost 50% more than it cost back in 2020. But food inflation would never have exceeded 10%.
I went through the top comments and I’m surprised that no one has mentioned a big part of this.
Food inflation is calculated not on a fixed set of goods, but goods can be switched in and out. What’s happened in the last few years according to some analysts is swapping for *cheaper* options (e.g. store brand vs name brand) has lowered the overall reported numbers.
I have observed that items experiencing the heaviest inflation are convenience foods or popular foods–things that people are very attached to and/or have cravings for. Prices may have originally gone up due to supply chain shortages, but they haven’t gone down because people are still willing to buy them. Meanwhile, I have found that produce prices haven’t changed as much, nor have some raw meats that you have to cook yourself. e.g., I seem to recall onions being ~$0.89-0.99/lb before the pandemic, and now they’re ~$0.99-1.19/lb. Or whole chicken I used to be able to buy for $8, and now I spend $10.
I would suggest being flexible with what you buy, and be more diligent with price comparisons. If I’m careful, I can still get a week’s worth of groceries for $35-40 (or less, if I really really tried). It’s when I’m not careful that I suddenly find myself walking out of the store having spent $80-100.
For the same reason the ice caps are melting at an alarming rate and the global temperature has “barely” moved a degree.
Usually because those numbers are year over year, but if you compound those rates over a few years, it gets pretty intense. Inflation has hid pretty hard since 2019.
The CPI is composed of eight major groups. Some of these have gone up considerably, some have not. But, even 4% inflation over five years would mean a 22% increase in prices over that time frame.
Food and beverages (breakfast cereal, milk, coffee, chicken, wine, full service meals, snacks)
Housing (rent of primary residence, owners’ equivalent rent, utilities, bedroom furniture)
Apparel (men’s shirts and sweaters, women’s dresses, baby clothes, shoes, jewelry)
Transportation (new vehicles, airline fares, gasoline, motor vehicle insurance)
Medical care (prescription drugs, medical equipment and supplies, physicians’ services, eyeglasses and eye care, hospital services)
Recreation (televisions, toys, pets and pet products, sports equipment, park and museum admissions)
Education and communication (college tuition, postage, telephone services, computer software and accessories)
Other goods and services (tobacco and smoking products, haircuts and other personal services, funeral expenses)
Because you remember the huge price hikes and forget the stuff that stayed the same or went back down, or went up but not that much.
Egg prices skyrocketed due to bird flu and then went back down. Everybody remembers paying $3 for eggs and thinks “food costs twice as much!” even though that’s not the price anymore.
Prices have certainly gone up overall, but not by anything like 100%. That’s just the fallible human brain at work.
I have no clue if it’s true but I’ve heard the numbers are being deliberately misrepresented because it’s an election year. Same with Jobs numbers and crime statistics. No idea if it’s true but it wouldn’t shock me if it was.
Annual inflation rates are annual.
You’re probably comparing a new versus old price that is over several years. There are also fluctuations that happen that are not related to inflation overall (egg prices for example, olive oil has been high recently).
If inflation for something was 100% for 2 years, it would literally quadruple in price. 2 years of 100% inflation would turn a $5 item in to a $20 item.
If something became 10% more expensive per year for 3 years, that’s a bit over a 33% increase, which can easily feel like 50%. You’re also cherry picking items. Prices do not uniformly increase across the board. Milk has barely gone up. I think Red Bull is about 50 cents more for a 4 pack than it was 5 years ago. Eggs were all over the place for a while. Steak has been higher, the veggies I tend to eat have gone up more in line with general inflation levels than anything obscene; something that was maybe $1.50/lb 5 years ago is usually $2/lb now.
A full and complete answer is beyond ELI5 but a big part of it is perception.
People don’t really notice a single year change. When you look at the prices in the store and think about what the price used to be it’s probably the price from several years ago.
So a report comes out and says inflation was 3% and was 10% last year and 6% the year before. The total inflation was 20%, which would make a $5.99 item now $7.19. And now the second issue, your brain just saw the price go from $5 to $7, which would be 40% increase instead of the actual 20%
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