May of 2020 saw the inaugural edition of the Pandemic Food Price Index, a 37 item market basket of foodstuffs to measure the impact of the Pandemic on grocery store food prices. Here are the results and observations for June, 2020.
- The nominal cost of the 37 item basket, shown at the bottom, was $89.09 in June. This was an increase of $.58 from the May 2020 baseline cost of $88.51. The Pandemic FPI is now at 100.66:
(((89.09-88.51)/88.51)*100) + 100 = 100.66
- An increase of .66% seems minor, but this is monthly and extrapolates to an annualized rate of 7.92%.
- A basket of 37 items priced at three stores is a total item count of 111 individual items. Of these 111 items, there were seven of the 111 not in stock at the time for an out-of-stock rate of 6.3%. Note that in each of the seven items, there were still labels on the shelves so the items were still for sale but just not in stock at that moment. This is in comparison to the three items out-of-stock in May, 2020 (rate of 2.7%).
- Five of the seven out-of-stocks were at the largest, internationally owned grocer and involved three of the four Staple category items (Canola Oil, Sugar, Flour generics) and two of the three cereals (Frosted Flakes, Rice Chex generics). In each of the cases however, there were other alternatives for sale so it really is a case of you can’t always get what you want…
- The anomaly was a case of stealth inflation. The local grocer was no longer offering the 32 ounce jar of generic grape jelly and had replaced it with an 18 ounce package at a lower price. I recalculated the per ounce price at the 18 ounce package level to an equivalent price at the original 32 ounce and this recalculated amount was used in the Index. The nominal impact is a price decrease of 36% for the lesser amount but the real impact, had the original package been used, would have been a 14% increase.
- The meat stocks were plentiful and what was notable in June versus May was the presence of the three pound “chub” of ground beef. These packages first appeared in my local markets in approximately 2014 and were produced from factory-style meat processing plants; I suspect that the grocers were introducing them in response to the declining purchasing power of their customers. These items were absent when I did the initial pricing on May 2 and their absence was due to the issues with Covid exposures at the factory-style meat processing plants.
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As I noted, an increase of .66% doesn’t seem like much but annualized to almost 8% in a nation in which the family income has been smashed and the Q1 GDP has dropped by 5%, it is highly problematic. Fortunately, enhanced SNAP benefits are in place for the remainder of FY 2020 and WIC benefits are likewise enhanced through the end of September, 2021. Where it is an immediate problem is for senior citizens relying upon their Social Security benefits. Why? Because the cost of food is not included in the calculations for determining the COLA increases that occur in the latter half of each year. If the prices continue to rise, the effective purchasing power of the senior citizen will actually lessen as the COLA amounts for the past five years have averaged 1.34%.
The grocery shelves are not bare and in each of the cases that I noted, there were other options available. Even toilet paper is back in each store, albeit in smaller package sizing. Rice was there but typically in larger sized bags and even in April and May, there was rice available but it was in brands sold to the Hispanic community and hence in a separate aisle. The generic brand staples (canola oil, sugar, flour) were missing in the one store and although the stocks were minimal in the other two as well, there were reasonable amounts of name brand items available. And no, I’m not going to count the damned bags of flour. The indication is thus that people are doing what they can to stretch their dollar as they hunker down.
The renewed presence of the lowest price per pound “chub” had a significant impact here. Had I used even last month’s lowest per pound price for ground beef, the FPI would have had a June Index level of 101.52 versus the actual 100.66. Extrapolating to an annualized rate, the impact would be a hypothetical 18.24% rise versus the present annualized rate of 7.92%. But I have severe qualms about that since I know that those plants are operating under the aegis of the invoked Defense Production Act, despite increased infection rates for those in the meat packing plants because of work conditions.
And I wonder whether or not, were we asked as part of a communal sacrifice for the common good, we would be willing and able to forego so much meat as part of our diet. It was what our great-great-grandparents did for the common good on the home front of the Second World War, sacrificing something for those on the front lines. But in times of Pandemic, the front lines are here.
