Thursday, January 14, 2010

That Orange Juice Will Cost You

So there ain't no inflation, eh? As Jerry Seinfeld would say "Did you ever notice..." that government statistics and actual prices are two very different things? In a previous post, No Raises This Year: Seniors Eat Cat Food I made the point that Consumer Price Index calculations were politically calculated.

According to the government, benefits didn't go up for Social Security recipients because the CPI didn't go up. But as I showed, real prices, not models of prices, did go up. And they will hit harder this year as stimulus money fades and people try to do more with less.

The arctic blast up and down the eastern seaboard has wreaked havoc on crops in Florida. It's the coldest it's been there in decades. Despite many protestations to the contrary, prices on fruits and vegetables will skyrocket. In today's NY Times article by Damien Cave:

“Tomatoes were down around $14 for a 25-pound box; now they are up over $20,” said Gene McAvoy, an agriculture expert with the University Florida, who predicted $100 million in vegetable losses. “Peppers — just after New Year’s they were $8 a box; now they’re up around $18.”

Translation: get ready to pay up to an extra dollar a pound at supermarkets in New York and Chicago.

I live in New York City, the Nanny City, where our Mayor Bloomberg exhorts us to eat well. It's kind of difficult when prices for fruits and veggies go up 50% or more. There's real inflation out here. Maybe not in DC theoretical models, which make no sense anyway. Throw away the math (it really helped in modeling future housing risk. Not) and ask someone on the street.

No comments: