Yeah, the research wizards at the Ag Department concluded food inflation in 2021 was exact same as 2020. We will see even smaller price increases in 2022.
US Department of Agriculture – 1/28/22 – 2021 retail food price inflation continued at the same pace as 2020, but varied among food categories – In a clever disinformation effort, the alleged economists at the Economic Research Service of the U.S. Department of Agriculture claim food prices increase of 3.5% during 2021 was the same rate of increase as in 2020. The mere 3.5% during 2021 is only slightly higher than the historical average of 2% from 2000 through 2019.
In newsflash to everyone who actually buys groceries or goes to a restaurant, food prices barely increased in 2021.
(Discussion cross-posted from my other blog, Nonprofit Update, because understanding impact of high inflation on our clients helps us serve them better.)
Because of the pushback this article is already receiving, it will likely be memory-holed momentarily so I will quote a few parts of the article. Will quote the entire article at the end of this post.
The headline information:
“Retail food prices increased by 3.5 percent in 2021, equal to the rate in 2020 and greater than the historical annual average of 2.0 percent from 2000 to 2019. Of the 12 food categories depicted in the chart, six showed slower price increases in 2021 compared with 2020.”
Prices for half the food you buy are coming down. Cool, huh?
So you see, inflation is based on counting categories on a chart, not looking at absolute dollars, relative prices, a representational basket of what consumers actually purchase, or any factor other than category by category. This analytical methodology is from alleged economists.
To reinforce the new way to calculate inflation:
“Inflationary pressures differ by food category.”
Price increases for food will be even lower in 2022 than either 2021 or 2020. More good news, huh?
“USDA, Economic Research Service (ERS) researchers project that prices for food-at-home, or food purchased typically from grocery stores or other food stores, will increase between 1.5 and 2.5 percent in 2022, lower than the 3.5-percent increase that occurred in both 2020 and 2021.”
That forecast is far more reliable than what you and I are seeing every time we go to the grocery store. Bureaucrats who stand accused of being economists, with unknown evidence supporting said accusation, are phenomenally more reliable than your pocketbook. You must trust big brother.
Let’s fact-check that analysis, shall we?
US Bureau of Labor Statistics – 1/12/22 – Consumer Price Index Summary – To consider for yourself whether the Department of Agriculture is lying through their teeth, check out the January release of CPI. Scroll down several inches and you can see the following changes for 12 months ending December 2021:
- +7.0% – all items
- +6.3% – food
- +6.5% – food at home (that means grocery store prices)
- +6.0% – food away from home (in other words, restaurant prices)
That is a long distance from 3.5%.
Amusingly, if you look at the graph from the Ag Department, there is only one category out of the 12 that shows more than 6% increase.
The chart on its face fails the smell test. Study it further and it fails the laugh test.
The 3.5% claimed by the fabulist from the Ag department is actually equal to the increase in food prices in merely the last five months of 2021.
For a more serious indictment of the USDA article, consider these paragraphs, which I quote from the US BLS article just cited:
“Food
“The food index increased 0.5 percent in December following larger increases in each of the three previous months. The food at home index increased 0.4 percent in December after rising 0.8 percent in November. Five of the six major grocery store food group indexes increased in December. The index for fruits and vegetables increased the most, rising 0.9 percent over the month as the index for fresh fruits increased 1.8 percent. The index for nonalcoholic beverages rose 0.8 percent in December, and the index for dairy and related products increased 0.7 percent. The index for other food at home rose 0.6 percent, and the index for cereals and bakery products increased 0.4 percent over the month.
“The index for meats, poultry, fish, and eggs declined in December, falling 0.4 percent after rising at least 0.7 percent in each of the last 7 months. The indexes for beef (-2.0 percent) and pork (-0.8 percent) declined after recent sharp increases.
“The food away from home index rose 0.6 percent in December, the same increase as in November. The index for full service meals rose 0.8 percent, and the index for limited service meals advanced 0.6 percent over the month.
“The food at home index rose 6.5 percent over the last 12 months; this compares to a 1.5-percent annual increase over the last 10 years. All of the six major grocery store food group indexes increased over the period. By far the largest increase was that of the index for meats, poultry, fish, and eggs, which rose 12.5 percent over the year despite falling in December. The index for dairy and related products increased 1.6 percent, the smallest increase among the groups.
“The index for food away from home rose 6.0 percent over the last year, the largest increase since January 1982. The index for limited service meals rose 8.0 percent over the last 12 months, and the index for full service meals rose 6.6 percent. The index for food at employee sites and schools, in contrast, declined 49.3 percent over the past 12 months, reflecting widespread free lunch programs.”
Consumer Price Index Summary from U.S. Bureau of Labor Statistics
Just a few highlights…
Food at home prices rose 6.5% in the last 12 months. This is in contrast to 1.5% average of the previous 10 years. This is a radical contrast to claim by USDA of 3.5% increase in 2020 and 2% over previous decade.
Increase for meat, poultry, fish, and eggs (protein in other words) was 12.5% according to BLS. That is the category with largest increase. Index for dairy is 1.6% for 12 months. That is category with smallest increase.
For contrast, the graph from USDA shows the meat category increased just under 8%; that is the largest increase. USDA shows fish & seafood and poultry at between 5% and 6%. That is something in the range of a 5% or 6% spread between BLS and USDA.
Skipping the sarcasm and ridicule for a moment, the USDA graph credits their information to the US Bureau of Labor Statistics Consumer Price Index data. In all seriousness, other than the dairy category, I do not understand how any of the data in the USDA graph or text is in any way supportable by CPI data from BLS.
We now resume the richly earned, full dose sarcasm due to the anonymous writer, editor, and supervisors at USDA.
Because I fully expect the USDA discussion to get memory-holed any minute now, I will quote the full article and include the graph.
Remember, it’s not nice to laugh at other people. On the other hand, you are at home, so go ahead.
The text:
“Retail food prices increased by 3.5 percent in 2021, equal to the rate in 2020 and greater than the historical annual average of 2.0 percent from 2000 to 2019. Of the 12 food categories depicted in the chart, six showed slower price increases in 2021 compared with 2020. Dairy products and fresh vegetables, in particular, had significantly slower price increases in 2021 than 2020 and their historical averages. Dairy product prices increased at 1.4 percent in 2021 versus 4.4 percent in 2020 and fresh vegetable prices increased by 1.1 percent compared to 2.6 percent is 2020. Conversely, prices in six food categories increased in 2021 at a faster rate than in 2020 as well as in years prior. Prices for fresh fruits, for instance, increased 5.5 percent in 2021 compared to a 0.8-percent decrease in 2020 and a 1.6-percent average increase over the prior 20 years. Inflationary pressures differ by food category. For example, meat prices, which rose the most of any included product groups, have been driven up by strong domestic and international demand, high feed costs, and supply chain disruptions. Winter storms and drought impacted meat prices in the spring, and processing facility closures due to cybersecurity attacks affected beef and other meat production in May. USDA, Economic Research Service (ERS) researchers project that prices for food-at-home, or food purchased typically from grocery stores or other food stores, will increase between 1.5 and 2.5 percent in 2022, lower than the 3.5-percent increase that occurred in both 2020 and 2021. Forecasts for all food categories for 2022 are available in ERS’s monthly Food Price Outlook data product, updated January 25, 2022.”
The graph:
As I prepared to hit the ‘publish’ button, had one last thought on how USDA might have made their calculations. Over the last many months there have been random gaps on grocery store shelves. Stuff just isn’t getting produced, or is stuck in a warehouse somewhere, or is sitting in a container off the coast of Los Angeles and Long Beach ports.
Perhaps USDA counted various stockouts as $0.00 in their spreadsheets. That would sure pull down the average price increases. Hey, just add a bunch of zeroes to the analysis. Yeah, that helps the numbers.