Bill Adams’ Post

Although the CPI print was high, the PCE came in as expected at 2.4% annualized which was good news - both measures are trending in the right direction and we’re near the “last mile” of the flight against inflation. That said, prices don’t come down after an inflation event, they typically stabilize unless there is a bigger economic event. The link to the WSJ article below is about soaring food and labor costs driving up the cost of a restaurant cheeseburger since 2018. Food costs are up exponentially (see graphic). Wages are also up substantially but not enough to keep pace with costs challenging workers. Restaurants, which already operate on thin margins are being squeezed, trying to pass the cost on to consumers but there is a limit. How much will you pay for a cheeseburger before you decide it’s too much? I did a fair amount of travel in 2006 for a project and encountered my first $15 burger in NYC back when the average burger was probably $7 or $8 and I remember thinking, who would pay this? — but I did to see if all the fancy toppings made it any better — it didn’t. Then my 2nd $15 burger in LA shortly after that and so began my unoffical journey of finding the best $15 burger during my travels. I ultimately decided that no burger is worth $15 dollars. Today, the average cost of a restaurant burger (not fast food or fast casual) is now $15 and although everything is more expensive, not even a burger is worth that price. #inflation #prices #wages WSJ - The Skyrocketing Costs Driving Cheeseburger Prices Up—and Restaurant Owners Out https://lnkd.in/e2D_Hfvf

Our takeaways from this week's #inflation print: 1) Year-over-year housing and food inflation continued to moderate. 2) The "big three" items got even bigger. 3) Dining out is disproportionately driving food inflation. 4) Keep a close eye on medical care inflation going forward. Check out our full analysis below, along with the updated Bancreek Inflation Visualizer, which you can now filter by category!

The Consumer Price Index (CPI) was flat in May following a 0.3% increase in April, the Bureau of Labor Statistics reported this week, marking the first time in almost two years the CPI was flat month over month. #inflation #economicindicators #cpi

Every extra 5 min extra wait in restaurants (consumers' excess dwell time at a business), suggests strong demand and may be followed by 80bps bump to food away inflation (4bps to headline CPI) according to Danis, Andras and Rettl, Daniel A., Using Wait Time to Predict Inflation (June 12, 2024). Available at SSRN: https://lnkd.in/eujMinVv or https://lnkd.in/eChcMupK The data cover 2019-2021.

Whilst a year of falling inflation is encouraging, month-on-month inflation of 1.3% in June serves as a reminder that the market remains volatile https://lnkd.in/d5_fmh-8

Based on Datasembly’s independently gathered grocery price data, food prices look to have broadly trended down in September. https://lnkd.in/gxbw-RpA While energy price deflation is ending, food price disinflation/deflation is still in evidence for September. Depending on how long the ILA strike lasts, the food price data could move up markedly in October, which removes another downward price pressure from the aggregate inflation calculations. Again, what is significant here is less the magnitude of any pricing change and more whether there is a transition from deflation to inflation. With core inflation running significantly above headline inflation, increases in food and energy price inflation will have outsized impacts on the headline metrics, and that will have an outsized impact on what the Federal Reserve does in November.

In light of the Office for National Statistics dropping inflation to 1.7%, the lowest in 3.5 years, we turned to our Head of Market Insights, Chris Elliott, for his thoughts on how this might affect the grocery market. "The decline in inflation was primarily driven by falling airfare and motor fuel prices, a result of lower oil prices caused by weaker-than-expected demand. While this is good news for motorists and those seeking some winter sun, there's more concern on the food front. Inflation for food and non-alcoholic beverages ticked up to 1.8%, the first increase since March. Dairy has been a major driver, with supply constraints and rising demand pushing costs higher, which inevitably hits consumers' wallets. Looking ahead, there’s hope on the horizon for shoppers: prices for olive oil, sugar, and cocoa are expected to ease from their record highs. Although it will come too late for Halloween this year, it could offer some sweet relief for trick-or-treaters next year!" #InflationUpdate #ConsumerPrices #MarketTrends #FoodInflation

We’ve seen how the high cost of groceries affects our clients as they attempt to stretch their budgets to afford enough nutritious food. This recent New York Times piece details why the slowdown in food inflation hasn’t been felt by many families: prices are still rising and may not go down significantly for some time. One particularly challenging factor: wages that weren’t growing as fast as rising food costs. “As supply chain issues have eased, grocery inflation has returned to levels that more closely resemble the typical rates before the pandemic. .... Still, since wage growth did not keep up with food price increases for a while, consumers have been through a ‘very tough period’ and not everyone has seen their wages keep pace.” https://lnkd.in/eYNszAUH