Monday, June 14, 2021

"Inflation Is Starting To Get Really Crazy – And It Is Worse Than You Think"

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"Inflation Is Starting To Get Really Crazy – 
And It Is Worse Than You Think"
by Epic Economist

"Every day, more news about rising prices are making the headlines, as the effects of inflation are becoming increasingly more evident to U.S. consumers. However, many of these reports are not exposing the true severity of this crisis, and that's happening because official data about the rate of inflation is still in single digits, but what most Americans don't know is that government agencies have dramatically changed the way inflation is calculated over the past few years. In fact, a recent piece by Forbes disclosed that over the past 30 years, the government has changed the way it calculates inflation more than 20 times.

But it doesn't matter how much they try to hide it, the effects of inflation can be observed everywhere, especially in food prices. Americans have been noticing a significant jump in prices at the grocery store. As one CBS affiliate described in a recent article, more and more grocery shoppers are experiencing "sticker shock" every day, as the price of food - especially meat, fruit and vegetables - is going up. If prices were indeed rising at a 5 percent annual rate, consumers wouldn't be feeling such painful impacts just yet. Unfortunately, the reality is much worse than it seems.

According to Jeff Cohen, a deli owner and meat wholesaler, the price of meat is out of control and the actual inflation rate for meat is much higher than what is being reported. “They said on national news it’s 10 percent. But that’s not true. it’s probably closer 20, 30 percent,” Cohen said. For Risa Kumazawa, an associate professor of economics at Duquesne University, this is a clear sign that the economy is overheating and as opposed to what policymakers have been persistently arguing, this is not a temporary blip, inflation will keep on rising and consumers will face even more challenges to keep up with the soaring costs. “When you realize this might be a longer-term issue than what we had thought, it might be too late to combat this problem,” Kumazawa explained. In other words, the more the Federal Reserve overlooks this issue, the bigger are the risks for this to evolve into a major national crisis.

A couple of years ago, an entire shopping cart of food would cost about 25 dollars. Today, if anyone manages to get a full cart of food for less than 200 dollars, that's a great achievement. It's getting harder and harder to take advantage of sales and make each dollar stretch as far as possible. These days, some of the sales prices are actually much more elevated than regular prices. That's occurring because some companies have been finding ways to raise prices without alarming consumers. Food manufacturers and grocers are resorting to "shrinkflation," a practice in which they package food in smaller containers while charging the same amount, and in that way, they manage shoppers' expectations.

Others have been attempting to use language that will not spark widespread alarm. A recent Bloomberg report described that if you ask Pampers maker Procter & Gamble Co., they will say they are not raising prices, they are “taking pricing". "Rival Unilever, known for Dove soap and Axe body spray, says it’s been “very active with pricing.” The prize for creativity - so far at least - has been home-improvement retailer Lowe’s Cos., whose finance chief told investors Wednesday that it was “elevating our pricing ecosystem,” revealed the report.

All of those indirect terms for rising prices illustrate the rhetorical backflips companies perform not to expose what they’re actually doing - responding to skyrocketing inflation on global markets, and protecting their profit margins by making their products increasingly more expensive. At this point, we have monumental piles of dollars chasing very few goods and services, therefore, prices have nowhere else to go but up. Our leaders should be focusing on taking emergency measures to prevent an inflationary collapse, but instead, they have been borrowing and spending massive mountains of money that we do not have, while the Federal Reserve is going to keep pumping mountains of cash into the financial system. So more painful inflation is coming for us, and the standard of living of most Americans will keep spiraling down."

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