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Inflation is up because gas prices are up. Gas prices go down, and you'd expect prices to fall. Nope!
Any time I shop at a grocery store or am shell-shocked by restaurant prices, I ask myself: Is everyone raising prices because everybody else is raising prices, whether it's necessary or not? And that goes for services and any number of other products. There's no products out there that are inflation-proof? Or is this just greed at work?
I'm old enough to remember price controls during the high inflationary period of the early 70's, but no mention of price controls today to control possible greed.
Inflation is up because gas prices are up. Gas prices go down, and you'd expect prices to fall. Nope!
Any time I shop at a grocery store or am shell-shocked by restaurant prices, I ask myself: Is everyone raising prices because everybody else is raising prices, whether it's necessary or not? And that goes for services and any number of other products. There's no products out there that are inflation-proof? Or is this just greed at work?
I'm old enough to remember price controls during the high inflationary period of the early 70's, but no mention of price controls today to control possible greed.
What do you think?
Price controls are a short term solution. They may be a necessity in a war. However, historical experience is when the controls are released that prices jump even more than they would have naturally. The complexity of the price mechanism in a capitalist economy is not understood by many. However, pricing acts as a signal to people in virtually all industries and trades. High gasoline prices encourage oil exploration and encourage refineries to function at 100% capacity. High lumber prices are a signal to lumber companies to cut and process more board feet of wood. When the price mechanism is distorted due to price controls it inhibits much of the response I just described to high prices.
I do my share of whining when I get on a freeway and feel I am surrounded by huge semi-trailer trucks. However, those trucks are making deliveries all over this country and that is rapidly eliminating the supply chain problems we were having back in 2021 and 2022. This was a huge factor in increased prices.
The inflation rate is gradually coming down. Politicians have a great incentive to bring it down by election day in November. The inflation rate in the USA following the Covid 19 crisis was either the lowest or one of the lowest rates in the world.
We currently have 2.9% core inflation (less if you add energy costs to the mix which have significantly declined in the last six months). We have 3.7% unemployment (lower than its ever been). We have GDP growth of over 3% at an annual rate.
I'm not saying things are rosy for everybody. The biggest problem in the economy right now appears to be high housing costs. However, increased construction and lower interest rates during this year will begin to ease this problem.
The story of the early 2020's is going to be how the Federal Reserve successfully maneuvered this country through the Covid 19 crisis and got us back on our feet without a recession occurring. My hat is off to Jerome Powell and the other members of the FRB. The other factor was business. Business in America responded to the crisis by successfully rebuilding a damaged supply chain in months rather than in years.
For gas/fuel prices, yes the increase impacts prices across the economy but in a somewhat macro way. The impact per unit of product wouldn't be much but on thousands the increase would be, so a decrease of, say, a quarter per gallon wouldn't have much effect per unit.
Also, don't forget that labor costs have gone up, insurance costs have gone up, property taxes have likely gone up, utility costs have gone up (the main natural gas supplier in Pennsylvania has just asked for a 25% increase in rates for later this year. They likely won't get that but they will get a significant increase, probably 18%+/-).
I noticed that some grocery items have gone up fifty percent! Honestly, I think that's sort of ridiculous. Justify it any way you want, but it's too much. I think those companies are probably often making record profits.
The worldwide covid epidemic seemed to play havoc on almost every aspect of life, including this economic aspect. It seemed to breakthrough the "guardrails" of our general economic thinking. And it just seems as if things have snowballed.
There's no indication that Nixon's price controls, administered by the Council on Wage and Price Stability (CWPS, pronounced cow-pssss), did much to control inflation. The effort was considered a failure. Doing something like that now would meet a similar fate and flies in the face of our 'love' for letting the 'free market' be the ultimate regulator of prices -- given sufficient competition in said marketplaces.
During that era I recall graffiti in a men's room in SF, CA that said:
"I have no beef with Nixon.
To which another outhouse poet wrote:
"Yeah, no pork or veal either."
I've seen inflation in grocery prices; especially egg prices as millions of hens were killed by an avian flu or disease.
Gasoline prices go up and down like an elevator and are hard to use as the boogeyman for general inflation. The games with OPEC and war in Ukraine are certain to have had some effect. This chart shows the spikes up/down over the past ten years. Some low prices are because OPEC (including our pals in Saudi Arabia) tried to bankrupt our shale oil drillers by cutting OPEC prices.
FWIW: here are the prices per gallon I've paid for 87 octane gasoline at the same supermarket in Peoria, AZ
2016-0909: 2.06/gallon
2017-0730: 2.16/gallon
2018-0424: 2.79/gallon
2019-0828: 2.88/gallon
2020-0817: 2.35/gallon (prices down as people are driving a lot less due to Covid lockdowns?)
2021-0713: 3.10/gallon
2021-1217: 3.80/gallon
2022-0411: 4.70/gallon (prices up as war in Ukraine shakes global oil markets?)
2022-0706: 5.60/gallon (prices up as war in Ukraine shakes global oil markets?)
2022-1227: 3.36/gallon (war jitters ease?)
2023-0519: 5.00/gallon
2023-0622: 4.40/gallon
2023-1002: 5.00/gallon
2023-1104: 4.00/gallon
2023-1207: 3.46/gallon
2024-0110: 3.39/gallon
Without smoking-gun evidence we can't know for sure if companies jack up prices 'just because' others are, but it can sure seem like it. My opinion is that it was awful easy for firms to claim "supply chain" issues to raise prices.
Hard to prove if price hikes were/are necessary or unnecessary. Corporate profits are still strong, and we'll get info in the next several weeks as major firms start to report their quarterly and annual economic data.
In order for this to be a "great debate" (and remain an open thread) we have to have more than just griping about prices.
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Last edited by Mike from back east; 01-27-2024 at 01:21 PM..
Without smoking-gun evidence we can't know for sure if companies jack up prices 'just because' others are, but it can sure seem like it. My opinion is that it was awful easy for firms to claim "supply chain" issues to raise prices.
...
This is only anecdotal, but the whole supply chain thing, while definitely valid in many cases back during the height of the covid epidemic, has become an excuse still used by some grocery stores. I complained at our local Krogers (Frys) about empty shelves where certain products should have been, and multiple times was told it was "supply chain issues". Only problem was that the local Albertson's/Safeway store usually had the same product and no supply chain issues, and three times I called specific food production companies and asked them if they were experiencing supply chain issues, and each time they said no, that they were shipping their products out at a regular pace.
This is only anecdotal, but the whole supply chain thing, while definitely valid in many cases back during the height of the covid epidemic, has become an excuse still used by some grocery stores. I complained at our local Krogers (Frys) about empty shelves where certain products should have been, and multiple times was told it was "supply chain issues". Only problem was that the local Albertson's/Safeway store usually had the same product and no supply chain issues, and three times I called specific food production companies and asked them if they were experiencing supply chain issues, and each time they said no, that they were shipping their products out at a regular pace.
Agree, it's way too easy to claim 'supply chain issues' as an excuse to jack up prices....not that capitalists ever do that to us, would they. As I recall Business 101, it's about the exploitation of resources and labor while charging all that the market will bear.
My Safeway runs out of things, but Fry's up at Four Corners has them. A guy at Safeway that I talk to often told me that our Safeway is at the end of the company's internal distribution chain and resupply of items often arrive short of what they ordered. Who knows for sure.
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Agree, it's way too easy to claim 'supply chain issues' as an excuse to jack up prices....not that capitalists ever do that to us, would they. As I recall Business 101, it's about the exploitation of resources and labor while charging all that the market will bear.
My Safeway runs out of things, but Fry's up at Four Corners has them. A guy at Safeway that I talk to often told me that our Safeway is at the end of the company's internal distribution chain and resupply of items often arrive short of what they ordered. Who knows for sure.
There's likely truth in that. People at both Safeway and Giant (big local chain) have told me the same thing, they'll order X units but only get X-y.
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