John Phipps: As Inflation Increases Costs for Consumers, Here's What is Often Overlooked

Inflation news fills the air. Partly I think it’s due to an unprecedented run of low inflation. It’s been a dozen-plus years since we managed to creep far above 2-2.5%. Nonetheless, that was yesterday. Who cares? Nobody cares about inflation that didn’t happen. inflation 1

Meanwhile, the average inflation rate, the Consumer Price Index (CPI), is just that an average. Since the graph was made, we logged three more months of relatively high inflation to end 2021 at 7% annual increase. As I have discussed before, each of us has a personal inflation rate depending on what we consumer. Does that ever make a difference, as this chart of some selected goods in the volatile food and energy categories. In fact, using a personal CPI calculator showed our inflation rate to be an embarrassing 0.8%. Obviously, we don’t do much expensive stuff, and power tools have remained affordable. inflation 2

These are percent increases, which can cloud the issue. I talked this year about how eggs are an astonishing bargain, so a 12% jump on a roughly $1 egg isn’t felt like the whopping jump in used vehicles. chart 3

The other thing to note is how the CPI jumped from month to month. COVID is messing with all our data, and we don’t have any similar situation to for comparison. I expect some bad decisions will be made as a result. And there are citizens who finally have had their years of warning about imminent inflation finally come true. That is almost a stopped clock phenomenon, however. The wildest future I can imagine is spending winding down as the pandemic savings are exhausted. That seems to be the way Wall Street sees it as inflation expectations remain below 3% for the year in 2022 and lower in 2023. That seems to be what the bond market is telling us as well. chart 4

While inflation is a real and present danger, some stuff remains remarkably cheap. For example, as February begins, it is time to add to my stylish collection of plaid flannel shirts on sale at the farm supply store for five bucks or less.  I already replaced our bedroom TV so I could tell the actors without glasses.

 

Latest News

The Untold Farmer Stories Of Ukraine: Q&A With Howard Buffett
The Untold Farmer Stories Of Ukraine: Q&A With Howard Buffett

Farmer and philanthropist Howard Buffett held a fireside chat during the 2024 Top Producer Summit to share his experiences visiting the front line of Ukraine over the past two years.

Tax Credits and Carbon Capture: How Ethanol Plants Offset Costs
Tax Credits and Carbon Capture: How Ethanol Plants Offset Costs

Ethanol plants are exploring carbon capture technologies to reduce their carbon intensity (CI) scores and qualify for tax credits.

AgDay TV Markets Now: Mike Zuzulo Says Row Crops Cautious Ahead of Report, Cattle Recover
AgDay TV Markets Now: Mike Zuzulo Says Row Crops Cautious Ahead of Report, Cattle Recover

Mike Zuzulo with Global Commodity Analytics says farmers and funds have sold in the corn market the last couple of sessions with uncertainty on several fronts, including growing concerns about the USDA reports. 

SoyFoam:  Fire Fighters Demo First Soybased Fire Suppressant
SoyFoam: Fire Fighters Demo First Soybased Fire Suppressant

Fire fighters from across the U.S. participated in a fire demonstration at the Dalton, Georgia fire department looking at the effectiveness of Soyfoam, the first soy based fire suppressant.

From Farm to Fire: First Soybased Fire Suppressant Hits the Market
From Farm to Fire: First Soybased Fire Suppressant Hits the Market

Since the 1950s, fire departments across the country have used products containing dangerous PFAS to put out fires. But the United Soybean Board has announced a greener alternative made from soybean meal.

EU Envoys Agree Deal on Ukraine Agricultural Imports
EU Envoys Agree Deal on Ukraine Agricultural Imports

Ambassadors from European Union countries reached an agreement regarding Ukrainian grain, extending tariff-free trade until June 2025.