Monday, March 24, 2008

The Inflation Chronicles

An ongoing series, as explained here. From readers:
  • I bought a pair of discount eyeglasses over the internet late last year for $79. They were from England, so the quoted price was in pounds. Because this is Chicago and our post office sucks, the first pair got lost in the mail but the kindly English chep glasses company sent me out a replacement pair free. I got an email from them yesterday. They got the original pair returned to them and wanted to know if I wanted to buy them at a slightly discounted price, since you know they may never be able to sell my exact prescription in the frames I picked out. I almost did it, except I checked the price--yes, in pounds they were knocking 10 per cent off. In dollars, they were close to double what I paid 4 months ago.

  • My friend went to Tijuana for dentures to save money.

  • Las Vegas is having problems with copper thieves. Games have to be rescheduled because theives are ripping out the copper wiring for scrap metal. The even hit the local food kitchen ripping the copper pipes from their refigiration units.

  • The Honda Classic golf tournament in Palm Beach last week offered Smuckers Uncrustables for $2.50. I don't remember ever seeing peanut butter and jelly sandwiches at a major golf or tennis tournament before.

  • Our branch of the biggest local grocery chain here, suburbs north of Boston, is now shutting down at midnight. Staying open 24/7 used to be one of their mainstay advertisements, but keeping even a skeleton crew on the graveyard shift at minimum wage has become too expensive as margins get thinner.

  • At happy hour last week here in Ft Lauderdale, a retired railroad engineer knew the current value of the dollar against the euro. Actually, he was off by 2/10ths of a percent but who's counting? My point is that this is the kind of stuff being discussed over a few beers nowadays.

  • Premium gas is over $4 in Manhattan (that is a 50% raise from about a year ago). Organic milk near $5 at my local deli in Brooklyn. Can of sprite? $1.35. Going to a movie? $12 at Battery Park cinemas. Street food vendors have signs apologizing for having raised their prices, since wheat and eggs have all gone up more than 50% recently.

  • A few months back I noticed that a lot of the bread at the supermarket appeared to have differently shaped loaves. The loaves weigh the same but the slices are wider resulting in fewer slices per loaf.

  • I'm down here in FL and a relative called the other day, very upset. $44 for soup fixings and eggs at almost $5 a dozen.

  • A client reports that baking flour (organic) has gone from $15 per 25 pound bag through $25 to $40 in the last 2 quarters. Futures for hard winter wheat have driven those flour prices to nearly $75 per 25 pound bag. At home, we use powdered cocoa on a daily basis. Until December, powdered cocoa in bulk was $2.89/pound but in January the price is $6.99/pound.

  • IN NYC...a 64oz carton of juice has gone up 50 cents from $3 to $3.50 (in NYC)...I won't event get into the dairy products.

  • Talked to one of the floor guys at TJs over the weekend. They've mostly stopped selling extra-large eggs in favor of large eggs because of the price increases.

  • Breyer's Yogurt...they were the last major producer to continue selling 8oz individual packages. But just recently even they reduced their product size to 6oz...while retaining the old 8oz price. Result, 33% increase. Talk about reduced package size...In 2003 I paid $100/month for $2500 deductible catastrophic health insurance. I now pay $155/month for $5000 deductible. My low-end DSL service has gone from $15/month to $25/month in two steps over the last 15 months. They must use a lot of oil or other commodities to deliver this service to me. Brussels sprouts just went from $2.49/pound to $2.99/pound. I just said goodbye to my favorite vegetable. Bread from all major bakeries sold in grocery stores used to have the price printed on the package. I noticed this practice disappearing in the past year. When wheat and delivery costs increase faster than a loaf can be made, delivered, and sold it does not pay to commit to a given price. In this neck of the woods, I could often find a dozen eggs for a little less than a dollar/dozen as late as the Fall of 2006. Typical low prices now are approaching two dollars per dozen. I could often find 12oz frozen OJ concentrate on sale for $0.99 two winters ago, and half-gallon cartons for $2 on sale. Now those respective sale prices are $1.59 and $3. I could go on and on...Soymilk, apples, bananas, tuna, and more have all increased faster than the so-called CPI over the last two years. The increases have accelerated over the last six months.

  • Two weeks ago, plain bagel (i.e., no butter, no cream cheese, no nothing); $0.75. This week: $0.90, i.e., 20% increase. NYC, btw.

  • The cost of the tolls for the Lincoln Tunnel, Holland Tunnel and George Washington Bridge just went up by 33/3% from $6 to $8. The cost of a subway ride, Metro North, Long Island Railroad also increased. I even think NJ Transit prices jumped as well.

And a few from me. I took this picture at a gas station in Connecticut a few days ago:

Also, about a week ago, I saw a guy in the supermarket wearing one of these pins (details here if you don't know what it is):

It appeared to be a genuine artifact. He looked to be in his twenties, too young to remember the last great inflation, so maybe he's been buying tons of them off Ebay with thoughts of cornering the market and cashing in nicely during the next few years. If "WIN" is just a reference to some current pop culture craze about which I'm blissfully ignorant -- a new Britney tune, maybe -- please let me know.

Keep posting or emailing me your updates. Remember, behavioral changes are just as important and interesting as actual price increases. "Going to Tijuana for dentures" is good, and I'd certainly like to know how that worked out.


Anonymous Anonymous said...

Come on CR, haven't you heard? Rising prices means Americans are obviously prospering and can afford to pay more! Those that can't afford it obviously hate America and everything it stands for (and want to see the terrorists win)

3/24/2008 6:25 AM  
Blogger 893748skldkdj said...

Maybe I should try buying cheddar cheese in TJ.

From 6.99 to 8.99 at Ralphs for the big package, in about 8 weeks.

This mouse is not happy.

And buying less cheese.

3/24/2008 9:41 AM  
Anonymous Anonymous said...

A spokeswoman for the American Trucking Associations discussing the recent increase in diesel prices..

"For every one-penny increase in the price of diesel, it costs our industry $391 million," she said. "In the last month, it's gone up 50 cents."

3/24/2008 9:42 AM  
Anonymous Anonymous said...

Just finished a weekend road trip to DC...

*Diesel over $4/gallon all up and down I-95 (and this morning I read that truckers are organizing a strike for April 1st);

*Hot Dog, Fries, Drink over $9 at a tourist trap on the Mall (yeah, that place has always been ridiculous... but this is mind boggling);

*Considering food/gas/lodging, we rationalized our trip with 4 kids by coming back a day early, packed our own food and drinks, used mcdonald's value menu when forced... no fancy restaurants or splurging on rides and whatnot. plus we stayed at budget hotels out on the beltway fringe.

I could go on, but key point here: we bit the bullet and hit the road this past weekend partly because my wife felt like gas prices might go even higher.

All of these anecdotes are indications that "well anchored inflation expectations" are less well anchored than the Fed believes.

3/24/2008 10:04 AM  
Blogger Mr. Hedley Bowes said...

Have all of these measures been successfully factored out of the CPI?

3/24/2008 12:21 PM  
Anonymous goldhorder said...

Our dear leader and his minions at the Fed have been able to hide our worsening economic condition with the real estate bubble. People have been using their homes as ATM machines and they felt wealthy. I have discovered it is easy to baffle Republican die hards lately now that the bubble is know the blank...terrified look in somebodies eyes when you show them something their brain can't comprehend because it goes against all they believe in. Either in an email or a word document create the following message and send it to all your die hard conservative friends....
go to msn money in their chart the dow avg, the S&P 500, and NASDAQ avg for the years 2000 to they come up right click on the chart and save it to your desktop...relabel them Bush years...choose years 1992 to 2000 and save those charts...relabel them Clinton years...go to and print gold from their charts and data for the same time periods. Then go out onto the internet and get all the quotes talking about what a great, strong economy we have, throw in a quote or two about our "strong dollar" policy. End it with the the famous Ron Suskind quote...The aide said that guys like me were 'in what we call the reality-based community,' which he defined as people who 'believe that solutions emerge from your judicious study of discernible reality.' I nodded and murmured something about enlightenment principles and empiricism. He cut me off. 'That's not the way the world really works anymore,' he continued. 'We're an empire now, and when we act, we create our own reality. '

If you really don't like them ask them how it feels to be a "Good German"

3/24/2008 2:44 PM  
Anonymous Anonymous said...

Went to a restaurant the other day and over many of the items a sticker had been placed with the "new" price.
Stickers with the "new" price was a feature of the seventies. Inflation is back all right.

3/24/2008 7:09 PM  
Anonymous Anonymous said...

Re the dentures in Tijuana - My friend went to San Diego at Christmas where he stayed with relatives. A full set of dentures cost $1K vs $2-3K in US. He initally had some discomfort but seems to be fine now.

About two years ago, his wife got a full set of porcelain overlays with caps etc at the same dentist for $4k, saving them more than $20k.

If I recall correctly, the dentist who owns the practice is American and also owns an office in El Paso. If anyone is interested, I'll get the name.

My girlfriend went to Costa Rica to get her eyes done because that's where the flight attendants went.

A few months ago, AARP had a big story about seeking medical treatment in foreign countries with lots of info on costs, options, research etc.

3/24/2008 9:52 PM  
Anonymous Anonymous said...

Here is a link to the AARP story I mentioned above.

"Patricia Hansen, 58, and her husband, Jan, painting contractors who live near Anchorage, Alaska, gave up their health insurance when the premiums soared to over $1,000 a month, with huge deductibles. Then Hansen needed hip surgery—at a prohibitive $40,000 to $60,000—and she began considering a trip to India....

The total cost for her travel and treatment: $15,000.

3/24/2008 9:58 PM  
Anonymous Anonymous said...

WIN = Whatever I Need

W's Idiot 'Nablers

3/25/2008 7:59 AM  
Anonymous Anonymous said...

I still have my WIN button. Whip Inflation Now

I was working on the Hill when they came out. We would wear them upside down --- No Immediate Miracles

3/25/2008 10:52 AM  
Anonymous John B. said...

770 mile round trip with a 30 mile per gallon vehicle- 80$-late February

1100 mile round trip this weekend in a 30 mpg vehicle- $120

this is just gasoline prices for a family trip, or a trip to see family

3/25/2008 12:07 PM  
Anonymous Anonymous said...

The weekend before last, bought a 12 pack of Miller Lite: $9.99.

Last night, went back to the gas station. Same 12 pack has a new sticker overlaying the old $10.99.

Curious if a sober mob is more dangerous than a drunk one.

3/25/2008 12:33 PM  
Anonymous Anonymous said...

Our housecleaning service (franchisee of national chain) raised their cleaning price from $78 to $88, citing fuel and other costs.

Prices at the local bakery went up - muffins went from $1.75 to $2.25 - a couple of weeks ago. They cited increased costs of ingredients.

Flights from our town in the Midwest to the East Coast are about $100 more than they were a year ago, and flights to the West Coast are $100-150 more.

3/25/2008 12:55 PM  
Anonymous Anonymous said...

Our housecleaning service (franchisee of national chain) raised their cleaning price from $78 to $88, citing fuel and other costs.

Prices at the local bakery went up - muffins went from $1.75 to $2.25 - a couple of weeks ago. They cited increased costs of ingredients.

Flights from our town in the Midwest to the East Coast are about $100 more than they were a year ago, and flights to the West Coast are $100-150 more.

3/25/2008 12:55 PM  
Blogger Spider said...

This past Saturday, I went to my hometown pizza joint, Sal's Pizza in Rockville Centre, NY. The owners wife was telling me that they're considering selling the place because they just can't make a profit anymore. (Which is a damn shame as it's the best pizza I've had hands down!)

A bag of flour (not sure what size) that cost them $9 a bag this time last year now costs $36!! That's a 400% increase!

She didn't even go into the cost increase in the price of mozzerella cheese or the gas prices for the ovens.

The price of a pie there is now somewhere between $15-16 when last year it was $11-12. So even at that their prices aren't keeping up with the inflation of their costs.

400% inflation in price in a year's time is insane!!!

3/25/2008 1:38 PM  
Anonymous Anonymous said...

"Meanwhile, in another sign of the worsening economy, the number of residents in Ohio receiving food stamps has almost doubled since 2001.A record 1.1 million Ohioans now receive food stamps. That’s nearly ten percent of the state’s population."

3/25/2008 1:48 PM  
Anonymous Anonymous said...

CostCutters haircut $11 -> $15.

3/25/2008 1:50 PM  
Blogger Spider said...


Would you email me that email you created? I'm not sure I'm doing things right on the MSN site

3/25/2008 2:04 PM  
Anonymous dignam said...

Hey there -- longtime reader, first-time responder. One week before the report in the NYPost about bagels, I was in my local pizza joint in the Bronx when one of the employees burst in wild-eyed decrying the price of flour, which he said had gone up 70% in the last year.

Here's a post you might enjoy.

3/26/2008 12:24 PM  
Blogger cavjam said...

Have all of these measures been successfully factored out of the CPI?

The Fed, as of 2000, doesn't use the CPI. It instead uses "core inflation" or chained dollar Personal Consumption Expenditure Price Index. This is sorta a moving average which, conveniently, omits food and energy prices. The moving average aspect means that, in times of accelerating inflation, increases are delayed in appearing as data. For some reason, it's been the PCEPI that's lately more likely to be quoted in news reports. Even the CPI, however, has been using chained dollar figures. Both overweight rent v house prices. Both, IMO, overweight clothing and electronics, each of which have moved to, shall we say, semi-sweatshop locales in the last decade thus suppressing the inflation rises.

Neither is very good at measuring value. The price of a TV, auto, or refrigerator, e.g., may increase by 3%, but the product may include more features than previously.

Anecdotes are good indicators, though they may not be graphable. I recently (~ a year ago) helped a friend set up a restaurant then went off to teach for a semester and vacation for a few more. When I got back, I was stunned. We'd factored in a 5% increase in food prices due to the foreseeable increase from oil prices. This was not half enough; and he uses almost no flour. Beans, rice, locally grown produce, the local (FL) catch of the day and free range chickens - up 14% per annum.

3/27/2008 9:24 AM  
Anonymous Jim said...

If you think the copper thieves in Las Vegas are bad, you should see what they are doing here in Wichita, KS. Stealing it from schools, parks, and stadiums, and sub-stations.
Sounds like it is high time folks learned how to grow veges in the back yard again. A few tomato, zucchini, and pepper plants are cheap and can provide lots of good eatin!

3/27/2008 2:42 PM  
Anonymous Anonymous said...

I still have one of the original WIN buttons too. Also had a WIN sticker on my shotgun at the time, cause I wasn't satisfied just whipping inflation, I dang well wanted to kill me some.

I think I might have to step up to a 10 gauge this time around.

3/29/2008 2:49 PM  
Anonymous Anonymous said...

On the news Sunday night, they were talking about insurance company profits and executive compensation, like Blue Cross Blue Shield (BCBS). Top executives salaries doubling, 47% increase, etc. Not just at BCBS, but Cigna and others. And why is it again that health insurance premiums are increasing astronomically, hmmmm... In contrast, they just closed a much need hospital in Chicago because they said they couldn't make a profit --- not enough people with insurance coming through the doors. Ah, but who cares, the owners were out of state. Their only stake was money. I heard that they are thinking of changing the Hippocratic Oath to represent this philosophy in healthcare ;-)

CEO's make a ton of money, but more importantly it's the entire compensation package. So in economic terms doesn't that mean people will be drawn to those positions thus increasing competition and reducing salaries. Or do different economic rules apply to CEO/Management than everyone else?

In looking for the link to that story, I found this story, "Mexico Gets Medical Tourists as Health Net Sends U.S. Patients". Insurance companies are paying people to go to Mexico for procedures. Wow!

4/07/2008 10:16 AM  
Anonymous e. nonee moose said...

The Honda Classic golf tournament in Palm Beach last week offered Smuckers Uncrustables for $2.50.

Those things are vile and repulsive...

4/11/2008 1:22 PM  
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