Inflation is easing. What Does That Mean for Your Grocery Bill

Key Point. Stop making these silly comparisons about lower inflation to a car slowing down or a car going the wrong way slowing down. So, if you were planning on spending, say $75,000 a year in retirement, on average you’ll be spending $93,750 to have the same quality of life.
Call it like it is and people will understand inflation just fine, and how this is not fine.
So this is how it works. Right now you have a dollar. Next year on this date, you’ll still have a dollar but it will be worth about 96 to 97 cents, on average. Probably, buying gas next year it will be worth about 93 cents of gas by volume. For food it will be worth about 94 cents of food by package contents size (probably on a per ounce of food basis). For you rent, certainly for your fixed rate mortgage it will be the same dollar. For clothing it will be worth about 97 cents.
The dollar you had in January 2020 you would have to buy for $1.25 if you bought one today. Another way of saying it is you can get something today that used to cost a dollar for a dollar and a quarter. If you have about a 25% higher paycheck now than you had then, you’re even in buying power.
But your savings dollars that you had in January 2020, for college or retirement, or if you’re in retirement? Those are all worth 75 to 80 cents of buying power now. So in 2020, if you were planning on spending, say $75,000 a year in retirement, on average you’ll be spending $93,750 to have the same quality of life. As of today. It is still going higher so next year that number would be about $97,150. So let’s say you had $500,000 saved for retirement in 2020. That’s now worth $333,333 in buying power, if you also had $500,000 equity in your home, that January 2020 net worth of a $Mil now has the buying power of $670,000.
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“As inflation continues to slow, shoppers are getting relief at the grocery store.”
FALSE!!!! A big lie.
Key. Slowing inflation does not give anyone any relief. YOU IDIOTS. It means the increase in pain you feel this month is less than the increase in pain you felt last month.
Everyone talks about a curve of inflation and in fact later in this article we will present one or more. In the entirety of Get Real Get Fiscal we will use lots of charts.
But in this case let’s compare inflation to Joe driving a car. I know, I know, too horrible to think about. But Joe takes his mind off the road and gets a bit drowsy and his foot starts to weigh more heavily on the accelerator. What happens? The car move ahead faster.
You can think of the speedometer like the Bidinflation-ometer. The faster the car goes the more the needle moves or the higher the number the digital display shows.
Rising food prices have been among the biggest drivers of inflation since 2020, with a combination of labor shortages, supply chain snags and bird flu outbreaks sending grocery bills rapidly higher.
This is also partially true and most importantly, partially false. It’s mostly false, so what we have here is a mostly false thing hiding behind a little bit of truth. We all know “We choose truth over facts!” (Joe Biden, August 2019, Des Moines, IA).
We are making our economy stronger with increased reliance on electric cars.
FALSE!!!! A big lie #2.
Key Point. You cannot affect the demand for oil by artificially constraining the supply of oil.
The biggest single contributor to inflation is constrained oil supply.
You see, you cannot affect the demand for oil by constraining the supply of oil.
Pick something that is more or less a necessity. Oil. Water. Medicine. Shelter. Sex. Reducing the amount of the supply does not affect the demand. Trying to supply an alternative does not reduce the demand (in any significant way).
All those things only serve to DRIVE UP THE PRICE of the necessity because it is supplied by less efficient means – lesser quality, lower potency, lower efficiency, further distance, more complicated supply lines.
An NBC News analysis of Bureau of Labor Statistics data shows U.S. consumers are paying nearly 40% more for a basket of common grocery items — including eggs, chicken, milk and coffee — than they did before the World Health Organization declared Covid-19 a pandemic in early 2020.
This is way bigger than the government figures compute. If you take the government figures at face value, they say the “shopping cart” of 200+ most purchased items has gove up by just over 20% since January, 2021. This is close to the time the pandemic ended and right at the time the Presidency changed hands. But as we will show, many common items are up more than double in that time. That’s because the way government figures are calculated, we had a “free market economy” where prices are set by the “invisible hand” that Adam Smith described back in Revolutionary Times. You see, Adam Smith analyzed that sellers of items try to get the highest prices for everything they sell (and this includes people who are “selling their labor” – that is, wages). But sellers cannot just raise prices indefinitely. Two factors prevent that: price sensitivity (economics call this “elasticity” in their jargonist fashion) and competition. Eventually people start turning away from products when the prices are higher than their expectations or capability to pay. And some sellers will analye that they can sell more products than the next guy, and make a bigger profit. For example, if they can buy their input materials for even a little less, they can maybe cut costs by 3%, and may make a little less, so sell their products for maybe 5% less. But they may sell 10% more product, so make quite a bit more. This is what WalMart and Costco and now Amazon do. With direct sales over the internet, companies like Dick’s Sporting Goods and Lululemon can do that as well.
So prices are regulated by the marketplace. That’s Smith’s “invisible hand.”
But that supposes the free market has the good to sell. Well, behind the scenes, every seller in the world uses energy. Regardless of your view of energy, fossil fuel is the largest component of energy. All those companies and employees use oil and most of them use coal too. If US government makes fossil fuels harder to get, then the price for the energy goes up and so do the underlying inputs for everything. In California the gallon price for gas went from under $2 to now over $4.25 as of this writing. This is more than double; it’s now 215% what it used to be. That’s a pretty good guess for the energy input component of everyone’s prices. Say Costco has 5% of all its costs as energy costs to keep the lights on, to transport goods, and even in the packaging costs (plastic is made of oil; cardboard uses energy to pulpify the materials and then press it out and dry it off). That’s 5% of the cost times 2.15 so you get overall cost going up by 11% on everything they sell! And there is no added value for that; it just comes out of your pocket. The government doesn’t reflect this compounded cost in the Consumer Price Index because energy is not included in that rate.
This is a different sort of “invisible hand.” Now, I have to admit this is not a very scientific example and probably any economist can poke all kinds of holes and show how 25 other factors have to be considered. But the fact remains that as stuff goes through the pipeline (so to speak) the costs get added up, and US artificially inflating oil prices by making oil scarcer than it should be screws up the “free market economy” and the numbers do not balance out any longer.
If you were an oil producer, well, to you the oil is “free.” All the costs are associated with getting it out of the ground, processing it, and delivering the product to the user. If you see the price of oil going up, you should be able to say “I’m gonna get more of that stuff and I will make more money.” But they can’t. You can drill a new well, in California, you can’t drill a well in a very large part of Arizona because Biden protected the land, and you can’t make new wells in government land or in the Gulf of Mexico or the plains of Alaska because Biden won’t let you anymore. So we cut our supply of everything back, and any additional oil we do get is from Venezuela directly, or buy on the world market. They say “money is fungible” meaning you can turn it into anything buy using it. Well, world oil is also fungible, and every country is bidding for it. We may buy oil from some stable country, but then the oil just flows to us by back filling oil from Iran and Russia, so we are indirectly supporting their economies, which are funding hostility around the world.
Does this make sense?

This is quite an old chart, but you can pretty much take the line at the right end and extend straight right. Everyone will tell you “it’s going in the right direction!” You know what? That misses the point. You have already lost value in your pocket, retirement savings, and any equity by the area under the mountain. All that value month by month is gone, and that 3 to 4 number to the right means that every season that goes by, another penny is stolen from every dollar you earn and every dollar you are worth.