Produce suppliers are caught in the middle of high input costs and the struggling consumer

Inflation-under-Biden

Important Takeaways:

  • PA food supplier warns Americans getting squeezed by inflation are becoming ‘resistant’ to higher prices
  • As the Keystone State saw inflation last year dig deeper into residents’ wallets than any other state, one Philly-based food supplier is warning that the fight may not be over yet.
  • The Philadelphia-based produce supplier has been caught between higher input costs and consumers struggling to pay for inflationary prices. According to Consumer Affairs, Pennsylvania saw the highest grocery inflation rate of any state in 2023, at an 8.2% increase year-over-year.
  • The typical U.S. household needed to pay $213 more a month in January to purchase the same goods and services it did one year ago because of still-high inflation, according to new calculations from Moody’s Analytics chief economist Mark Zandi.
  • Americans are paying on average $605 more each month compared with the same time two years ago and $1,019 more compared with three years ago, before the inflation crisis began.

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Inflation is cooling but we’re still paying more at the grocery store; Joe Biden blames it on corporate greed

CPI-January-2024

Important Takeaways:

  • Inflation may be rapidly cooling, but there’s one area that continues to eat away at Americans’ budgets: Stubbornly high food prices.
  • Rising food costs were one contributor to the hotter-than-expected inflation report on Tuesday, with food prices rising 0.4% in January from December, a faster pace than the overall 0.3% rise in the Consumer Price Index (CPI).
  • The CPI, a basket of goods and services typically bought by Americans, measures two types of food purchases, groceries and “food away from home,” or restaurant and other prepared meals. Both are rising, but restaurant prices are increasing at a faster pace, jumping 5.1% on an annual basis compared with a 1.2% increase in grocery costs.
  • Any increase in food prices may be especially painful to American consumers, given that supermarket prices are now 25% higher than in January 2020, while inflation has increased 19% over that same time. That means even though grocery costs are now rising at a slower pace than in the depth of the pandemic’s inflationary spike, the same shopping basket still costs more than a month or a year ago, a fact that has soured many consumers on the economy.
  • The reason for inflation’s stubborn hold on food prices can be linked to a number of issues, from higher labor costs at manufacturers that trickle down to consumers, to record-low cattle numbers that are driving up the cost of beef and steak.
  • But some policy experts see other issues at work: Corporations, they claim, are increasing prices simply because they can. President Joe Biden last month warned that companies are “ripping people off” with a combination of price gouging, “greedflation” and shrinkflation.
  • In fact, five types of food have been responsible for 30% of grocery inflation in recent years… They are beef and veal; poultry; non-frozen, non-carbonated juices and drinks; fresh fruits and vegetables; and snacks.

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We’re getting used to higher prices for everything so you’re probably not surprised to hear that Inflation rose again in January

US-CPI-2023-2024

Important Takeaways:

  • Prices rose more than expected in January as inflation won’t go away
  • Inflation rose more than expected in January as stubbornly high shelter prices weighed on consumers, the Labor Department reported Tuesday.
  • The consumer price index, a broad-based measure of the prices shoppers face for goods and services across the economy, increased 0.3% for the month, the Bureau of Labor Statistics reported. On a 12-month basis, that came out to 3.1%, down from 3.4% in December.

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‘Fast Food’ restaurants no longer fast, affordable or even convenient

Egg-McMuffin

Important Takeaways:

  • ‘What HAS the world come to?’ McDonald’s customer is left outraged after being charged $7.29 for single Egg McMuffin at Connecticut restaurant
  • A McDonald’s customer was left astounded after paying $7.29 for a single Egg McMuffin in a Connecticut drive through.
  • Bespoke Investment Group posted a picture of the customer’s receipt with the caption ‘$7.29 for one McDonald’s Egg McMuffin. What has the world come to?? These were 2 for $2 pretty recently.’
  • The bill records the purchase of two Egg McMuffins for $14.58 and one Bacon, Egg & Cheese McGriddle without two half-strips of bacon for $7.19.
  • The incident is even said to have spooked the Biden administration after critics claimed it was yet another symptom of the soaring inflation that has hurt millions of Americans’ pockets.
  • McDonald’s was among the many other fast-food chains that raised their prices in 2021 to account for inflation and increased labor costs.

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Standard of Living in the US has taken a nose dive; fresh fruit has become a luxury item that many can’t afford

Impact-of-Inflation

Important Takeaways:

  • OC food banks see rise in demand following inflation
  • Despite a recent cooling of inflation, organizations in Orange County dedicated to serving the most vulnerable populations report a tremendous need.
  • Two prominent nonprofits in Orange County both agreed on the demand for affordable options. They are not only witnessing an increase in the number of families seeking assistance but are also encountering new families that have never sought help before.
  • In Orange County, one in every 12 people is facing food insecurity, according to reports.
  • “We are seeing a lot of new families who have never had to access these services before,” said Madelynn Hirneise, CEO of Families Forward.
  • Helena, an Irvine resident and mother of three, challenges stereotypes about the area’s affluence, sharing that it is becoming increasingly harder to stretch a dollar. “If you fill up the cart, that’s a lot of money, it’s like one week of pay check,” said Helena.
  • The nonprofit Second Harvest Food Bank of Orange County, which provides food for 400,000 people a month in Orange County, has seen a nearly 60 percent increase in demand since before the pandemic.
  • Items like milk, greens, and fresh fruits have become luxuries that many families can no longer afford. The struggle to maintain a decent standard of living has become a widespread concern.

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What Savings? JP Morgan stats show most Americans have burned through their savings since Covid

Inflation-adjusted-income-chart

Important Takeaways:

  • 99% of Americans will be financially worse-off than they were pre-pandemic by mid-2024, JPMorgan says
  • The majority of Americans have burned through their excess savings piled up during the COVID-19 pandemic, and in the coming months, JPMorgan says it is likely that almost everyone will be worse off financially than they were in 2019.
  • In a Thursday note, the bank’s top stock strategist Marko Kolanovic said 80% of consumers, a group that accounts for nearly two-thirds of consumption, has already depleted any savings cushion they may have built during lockdowns.
  • “It is likely that only the top 1% of consumers by income will be better off than before the pandemic,” Kolanovic wrote, pointing to the growing signs of credit card and auto loan delinquencies, as well as Chapter 11 filings.

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Even after receiving Government Stimulus during Covid most Americans are still living paycheck to paycheck

Sorkin-and-Dimon

Important Takeaways:

  • Asked by Andrew Ross Sorkin at the New York Times DealBook Summit why perceptions of the economy are poor in recent polling, despite some positive indicators, Dimon said inflation and other issues are holding it back, and again at the expense of lower earners.
  • “If you look at the U.S., yes, you know, almost all-time low unemployment, but inflation is hurting people,” he said. “The bottom third, I kind of think they have a right to be p—ed off. I would probably be a little p—ed off if I were them.”
  • “You’re all wealthy and have money and stuff like that, but their average wages are $15 to $20 [an hour]. They’re the ones who lost their jobs in COVID,” he said. “They’re dying five or six years younger than the rest of us. They’re the ones who don’t have medical insurance. They’re the ones where their schools don’t work. They’re the ones dealing with crime. What the hell have we done as a nation?”
  • “Yeah, corporate profits are up because people are spending a lot of money. Where do they get the money? The government gave it to them. Well, of course, profits are up,” he added. “So, I’m quite cautious about the economy… I would just be a little careful about that just because it feels pretty good today.”
  • The Biden administration has repeatedly touted low unemployment and declining rates of inflation, but a majority of Americans say they’re living paycheck to paycheck, and the economy is viewed as a place of vulnerability for the White House going into 2024.

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Middle class struggles as inflation literally robs us of our earnings

Important Takeaways:

  • ‘I don’t understand how I make $34 an hour and can’t function’ The Unseen Struggles of the Middle Class
  • Melanie paints a vivid picture of her food situation, where she has resorted to budgetary restrictions to survive.
  • She shares, “What I’ve started doing is I buy a loaf of rye bread, and I work really hard to keep that one loaf of rye bread lasting me the whole week. And I eat peanut butter, so I’ll eat peanut butter toast whenever I’m hungry.”
  • This situation has forced Melanie to rely on her mother for sustenance, ensuring her daughter does not face the same food shortages.

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Inflation has 61% of Americans living paycheck to paycheck and Feds considering raising interest rates again

Fed-Rate-Outlook

Important Takeaways:

  • 61% of Americans are living paycheck to paycheck — inflation is still squeezing budgets
  • The number of Americans who say they are stretched thin has remained stubbornly high, according to several reports.
  • Federal Reserve Chair Jerome Powell recently called for continued vigilance in the fight against inflation, warning there may even be more interest rate increases to come.
  • The battle against inflation is not over.
  • As of July, 61% of adults still said they are living paycheck to paycheck, according to a new LendingClub report, slightly more than last year’s 59%.
  • June and July both saw easing in the pace of price increases, with core inflation up 0.2% for each month, according to the U.S. Bureau of Labor Statistics.
  • But in recent remarks, Federal Reserve Chair Jerome Powell said inflation “remains too high” despite those positive indicators, and warned that more interest rate hikes are still possible.
  • Central bank officials have already raised rates 11 times, pushing the Fed’s key interest rate to a target range of 5.25% to 5.5%, the highest level in more than 22 years.
  • Now, 78% of consumers earning less than $50,000 a year and 65% of those earning between $50,000 and $100,000 were living paycheck to paycheck in July, both up from a year ago

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Feds efforts to wrangle inflation has Mortgage rates at 7% hitting 21- year high

Mortgage Rate graph

Important Takeaways:

  • Mortgage rates surpassed 7% this week, hitting the highest level in more than two decades
  • That’s the highest point since the first week of April 2002 and marks just the third time rates have exceeded 7% since then. The last times were in October and November of last year, when the rate reached 7.08%.
  • The increase this week further deteriorates affordability for budget-conscious buyers who are facing elevated home prices and a shortage of choices because homeowners remain reluctant to sell and give up their lower mortgage rate.

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