Consumer Price Index numbers were released Wednesday. Buried in the report were serious rises in year to date price increases. Here is list of price increases in the last 12 months:
Milk 8.7%
U.S. meat 13% (beef and veal prices up 18% and pork prices up 11.4%)
Butter 24%
Clothing 3.7%
Women’s Outerwear 11%
Children’s Footwear 7.8%
Prescription Drugs 3.8%
Lodging Away From Home 5%
Here is the complete article showing prices increases and decreases.
The best indicator of inflation is the prices you pay for everyday goods. I have a saying, the best economist is the consumer. Most consumers will self monitor the prices paid on goods they frequent. The picture below is a 2012 menu from Five Guys Burgers. The address is listed on top of the store location and the date of print is lower right hand corner.
I decided to go to the store website of the same address online to compare prices. You can view it yourself here at this link. Here are the price comparisons of 2014 and 2012.
Hamburger $5.79/$5.19 14.4% increase
Cheeseburger $6.49/$5.89 10% increase
Bacon Burger $6.69/$5.99 11.6% increase
Bacon Cheeseburger $7.29/$6.49 12.3% increase
Not all price have gone up. Drinks and fries have stayed the same. Hot dogs and Sandwiches have also increased.
Inflation is being reported amongst the bigger food chains this past month. This will ultimately lead to higher costs for the consumer.
CNBC reported in Mid August:
“Food retailers like Red Robin Gourmet Burgers and Noodles & Company are sounding the alarm on inflationary pressures, raising the question: Is this the start to higher food prices for consumers?
“Official data show inflation only gradually rising for the economy as a whole with the personal consumption index gaining 1.6 percent in June; however, a dozen food companies in the past few weeks have warned steeper price hikes hurt results last quarter.
Prices are rising for several restaurant staples like beef, seafood and cheese. But costs aren’t up everywhere: Grain and vegetable prices, for example, have been declining.
“This morning Red Robin said lower margins, which fell 1.3 percent from the same period a year ago, were mainly due to higher food and beverage costs.
“Noodles & Company, which reported last night, posted a two percent drop in margins due to increased costs. During the company’s conference call, CFO Dave Boennighausen said the cost of goods sold rose 70 basis points last quarter as a result of modestly higher pork, dairy and shrimp ingredient costs, as well as more promotional activity.
“Wholesale food inflation rose 4.2 percent in the first six months of the year, its steepest rise since 2011; however, menu and grocery prices – what consumers are paying – were only up 2.2 percent and 1.6 percent, respectively, in the same period, according to the National Restaurant Association.”
These are striking numbers considering the purchasing power(Economies of Scale) these chains have compared too smaller food retailers. The smaller ones which most refer to as “Mom & Pop” will not be able to keep up as inflation keeps increasing. The consumer is still feeling squeezed on normal groceries going up in price. Eating out is a very easily controlled expense to decrease.
Sometimes in life it’s o.k. to splurge on clothes shopping. But one man did it in a big way and Economic Policy Journal lays out the details:
Pankaj Parakh owns a pure gold shirt worth about £127,000 (roughly $213,000).He had it custom-made for his 45th birthday. The shirt, made out of 18-22 carat gold, weighs more than four kilograms (nearly nine pounds). The gold itself is 18-22 carat purity, and there have been no other metals used. It is lined with a thin cloth for added comfort
John Maxfield from theThe Motley Fool penned an article in the USA Today that shows an enticing graph of potentially the next big crash in the markets.
Austrians economic disciples have been screaming the last decade about the Federal Reserve’s printing or now digitizing of money to the banks through borrowing. On top of that, the federal government has needed massive amounts of money to fund welfare/social programs that are by law “mandatory”.
Maxfield and Austrians part ways with his explanation in the article. There really is no more denying inflation is happening. Pricing is exploding across many sectors.
Personally, I have followed the Feds printing and done well. But the money supply is drying up and a downturn is very real down the road
Silver overall is a great investment to protect yourself against inflation. Just 6-7 years ago people were saying it would never go above $14/oz. Now it sits around $20/oz with many investors saying it’s severely undervalued. Here is one piece of news pertaining to silver:
Investor and industrial consumption of silver has advanced at a healthy pace in 2014, so far. The silver price is up 5 percent as of July 15 from the beginning of the year. Globally, silver bullion coin sales are up 4.5 percent through the 1st quarter of 2014, according to precious metals consultancy Thomson Reuters. U.S. Mint sales of American Eagle Silver Bullion coins maintained near record level sales, totaling 24.1 Moz for the first six months of 2014, just shy of the 25.0 Moz sold in the first half of 2013.
Last few months been picking up chatter about Mexico potentially backing their peso with silver. The website Economic Policy Journal ran a piece addressing the issue:
For many Americans the country of Mexico conjures up images of a third world nation. The poverty, lack of basic services, and extreme violence has left the populace so desperate that thousands of people on a daily basis head to the United States for a better life. But according to Future Money Trends, all that could change in the near future as key Mexican financial leaders and politicians have been working to institute sweeping monetary change that, if implemented, could unleash a global power shift of epic proportions.
Not a popular subject to discuss here in the U.S. is the rest of the worlds disgust with the devaluing of the American dollar through our Federal Reserve while racking up major debt. Many countries have now started trading in their own currencies:
Like recent monetary shifts in Russia, China and the middle east that aim to divest themselves of US dollar reserve trade requirements, the news of such a move in Mexico has been downplayed. And though it is being generally ignored as a serious possibility, a powerful consortium of influential people in Mexico believe it is a realistic possibility, and one that could be responsible for shifting the balance of world power.
You can read the rest of the article here.
If this ever got serious, Silver would be the major investment to be in along with Mexico markets. World Central Banks will put up a major fight in not letting this happen.
Hoosier Econ 