Practical Dad

PracticalDad Price Index July 2014:  Eating Hamburgers for Fiber

It's a less than delicious irony that on the day that I gathered the prices for the July 2014 PracticalDad Price Index, I stopped at a local Burger King for a Whopper and fries.  Later that evening, I read that Burger King is one of a number of fast-food chains that are extending beef supplies - and padding profits - by using MCC (Microcrystalline Cellulose), aka wood pulp in their burgers.  The irony is that for all of the Burger King concern about rising meat prices, the cost of a pound of 80% lean ground beef was unchanged in July from the previous month.  The less than delicious part was the taste in my mouth when I realized that I not only have to now concern myself with cavities, but also splinters.

As to the PracticalDad Price Index, the Total Index of the 47 item market basket actually declined slightly to 110.2 from June's 110.53 (November 2010 = 100) so that the total price of the market basket of grocery and related items was 10.2% higher than in November 2010.  When the ten non-food items (soap, aluminum foil, etc) are removed so that 37 core food items remain, that 37 item Food-Only Index actually rose to 113.22 from June's 112.65 (November 2010 = 100) so that the cumulative price of the 37 items has risen 13.22% since November 2010. 

The big movers in previous months - meat and dairy - were essentially flat with only a minor rise in the cost of a pound of hot dogs and pound of chicken with the cost of ground beef unchanged.  The big increases this month were in wheat based products - specifically hot dog rolls and spaghetti - as one of the three grocery retailers jacked prices on those items by 29% from the previous month.  Note that this retailer, which has had some profitability issues, unilaterally cut prices on specific core items as part of a program to show their customers that they were passing along savings; this was not a one or two week sale, or even a two month sale but instead a program that actually changed the unit price labelling on the shelves for an extended period of time.  Well, that program ended and the prices for some of these items are now rejoining their brethren amongst the other stores.

The point to take from this is not that one retailer was masking the issue, but instead that the issue of inflation is a conflict between monetary policy (commodity prices such as sugar, aluminum and et cetera), supply-demand issues (dairy and meat) and actual deflation due to the economic weakness of the end consumer, who is watching his/her income continually decline.  This particular retailer has had issues related to profitability and has had to take measures to shore up the customer base and provide competition based upon price instead of other factors.

The story about Burger King is one more brick in the mental wall that I'm building against corporations.  The ostensible line is that they're just trying to keep prices down for the end-consumer but the real question for me is when the addition of the cellulose extender began, because the recent rise in meat prices is relatively recent and probably post-dates the cellulose usage.

And here's the update for July and previous months.

 

PracticalDad Price Index - July 2014
Month Total Index Food-Only Index Spread
4/14 110.28 113.59 3.31
5/14 109.85 111.54 1.69
6/14 110.53 112.65 2.12
7/14 110.20 113.22 3.02

 

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