Inflation Drives Up Grocery Prices
(The New American) -- by Daniel Sayani --
In a clear indication of the times, economists predict that the odious tide of inflation will continue to ravage the U.S. economy, as the price of groceries and gasoline continues to soar.
The fundamental disconnect between the Federal Reserve Bank, which claims that inflation is low, and the economic realities facing the American people is stunning and stark: Simply put, Ben Bernanke and his associates claim to see deflation, while working Americans are hit hard by the harsh realities of inflation at the gas pumps, shopping malls, and supermarkets.
A Stealthy Price Index
Accounting for this discrepancy is the fact that the Federal Reserve utilizes a roundabout mechanism for economic forecasting known as the Personal Consumption Expenditures Price Index, a nationwide indicator of the average increase in prices for all domestic personal consumption. The PCE Price Index, also known as the Implicit Price Deflator for Personal Consumption Expenditures, constitutes the deceptive means by which the Federal Reserve skirts the ugly truths of inflation and consumer prices.
By utilizing a biased and rigged means of economic forecasting and evaluation, lacking in validity, the Federal Reserve stealthily covers its tracks and hides under the protective sheath of the PCE Price Index, shielding itself from criticism by those who challenge its policies and economic indicators.
The fundamental problem, however, with the PCE Price Index is that it is based on changes in prices of items that are actually used during a period, rather than on a fixed basket of purchases. The econometrics utilized by the Federal Reserve conveniently exclude volatile food and energy prices, which explains why the Federal Reserve documents a core consumer rate increase of only 0.8 percent, when in actuality, the index level was up 1.2 percent since last January. Such figures are the inevitable outcome when the Federal Reserve’s core rate excludes food and energy prices, the two factors that most directly affect Americans’ daily lives...
The overt manipulation of inflation statistics, the unbridled printing of money, coupled with a chronic 40-plus-year continuation of fiat currency (i.e., no gold standard), unemployment, declining median incomes, and the rising prices of commodities — all taken as a whole — serve to create a toxic stew of economic depression that will churn the national stomach.
While the Federal Reserve claims that inflation is decreasing and declares that it will be years before there is any significant inflation, in the words of Dennis Lockhart, president of the Atlanta Federal Reserve, “There seems to be a disconnect between what the Fed is saying and what people are experiencing when they fill up their gas tanks or read about rising food prices around the world.”
On Different Wavelengths
Though the Fed claims that inflation is not exerting its influence on American consumers, the reality is bleak. While Bernanke ignores the reality of inflation, the European Union and England have publicly stated that they are on alert as inflation is ticking higher. Furthermore, the price of food in the United States is expected to skyrocket beyond already high prices, according to Bloomberg Business News...
The price of corn, used mostly in livestock feed, is up 80 percent from a year ago on the Chicago Board of Trade, and touched a 31-month high on February 22. The increase is partly driven by soaring demand for the grain as a biofuel — about five billion bushels will be devoted to making ethanol this year, compared with 4.95 billion for the 2010 crop, Glauber said. Corn isn't the only grain to see gains; in the past year, soybean meal prices have risen 37 percent, and wheat is up 73 percent.
While the rising food prices could be remedied by limiting government interference in the commodities markets, government instead meddles in the affairs of the market by demanding that farmers produce corn and other foodstuffs for the Quixotic goal of developing “green energy,” rather than allowing these commodities to be utilized for human need. This is another classic example of how environmentalists place their misguided exaltation of the environment over human needs, as the quest for ethanol, windmills, and other green technologies continues to ravage the economy.
Owing to the use of corn for ethanol production (an economically impractical venture supported even by some “conservatives” such as Newt Gingrich), conditions of scarcity (lower supply), coupled with greater demand, result in higher prices. Higher costs for corn, which is the primary feed for pigs and chickens, may boost pork prices as much as 6.5 percent and eggs 4.5 percent this year, the USDA said.
Additionally, the department's forecasts also recently were raised for meats, eggs, cooking oils, fruits and vegetables, sweets, cereals, and baked goods. A chilly winter in Florida, Texas, and Mexico has hurt tomato crops in all three areas, likely meaning that prices will be higher until later this month or mid-April. Harvard economist Richard Benson has described these rising commodities as “an inflationary cocktail in the making,” outlining the following agriculture commodity price percentage increases year-by-year:
Coffee — 45%
Barley — 32%
Pork — 68%
Oranges — 35%
Cotton — 40%
Salmon — 30%...
Known as agflation, the continual, sustained increase in food prices has been an ominous trend in the U.S. economy, indicative of the disastrous effects of the Federal Reserve and its continued manipulation of American currency and consumer commodities. As food prices rise at a rate faster than inflation, companies such as Kellogg, McDonald’s, Kroger, and Safeway have been open about the economic dilemma faced by their consumers: The public will have to shoulder more of the higher costs for ingredients. For these companies, the big challenge will be how much they can swallow and how much they can pass along to consumers, in terms of offsetting the costs and benefits inherent in the inflationary food spiral.
Thanks to the Federal Reserve’s manipulative policies, coupled with the environmentalist menace, poor crop yields, and record-breaking harsh winters (on a planet that is allegedly warming), sheer survival will become the new fiscal aim for most American families, as their hard-earned dollars will yield less food and smaller quantities per unit at weekly trips to the supermarket...MORE...LINK