What is the point of paying attention to something as mind-numbingly mundane as food prices? Why bother at all? It can be boring and frankly hard on the knees when you’re having to kneel in the grocery baking aisle to read the fine print on a shelf label for a four pound bag of store brand sugar. But there are cases when it’s worth the trouble.
This particular case is the third generation of what I refer to as a “kitchen table” economics project. The project being to simply follow what is happening to a select market-basket of food items at regular intervals and watch what happens to them. The first generation project was undertaken to track the effect of the Federal Reserve’s novel Quantitative Easing from November 2010 to June 2016. It ended because of personal health issues and the responsibility of supporting a parent with dementia. The second generation to watch the impact of the pandemic on the grocery shelves as the supply chain was upended, and that lasted only a few months because supply disruptions made the results unreliable as items were chronically disappearing from shelves. Along with the fact that my curiosity seemed less important as my unhindered ability to breathe.
This generation? Well, my Congressman is one of those Republicans who has adopted Steve Bannon’s mantra of flooding the zone with shit. It doesn’t seem to matter what the issue is or how long the issue has existed, it can only be pegged to the policies of a particular President of a particular party. Even if that President has only been in office for nine months. My lot has become one of haunting his social media pages, since he doesn’t hold public forums and his sole means of routine dispersal of information to the general public is via a short weekly address on a local Christian radio station, and tossing in as much factual information to clarify as possible. Since he regularly goes back to what is referred to as Bidenflation, this is something with which I am familiar. So welcome to Gen 3.
The premise is simple with a consistent set of rules.
- What is the average cost of a basket of the same 36 foodstuff items from three unrelated grocery stores in my Congressman’s district, the 11th of Pennsylvania?
- The three stores reflect three different levels of ownership. One is a large chain owned by a European firm, the second is a regional American chain and the third is a purely local grocery store chain with only a few stores in the area.
- There are 36 separate items in eight categories: Bread, Cereal, Dairy, Drinks, Fresh Produce, Meats, Packaged Produce, Staples. So 36 items in three stores yields 108 separate data points (36*3) per monthly survey.
- The theoretical shopper is shopping to save money whenever possible, so almost all of the items are store instead of name brand. If the item is actually discounted for a special sale, that discounted price is ignored and the regular price is used; a real shopper might take the sale item, but the temporary savings would hide the real effect on the full basket price (what I found over the years is that grocers will put items on sale and when the sale is over, return that item to a higher price than prior to the sale).
- There is a decision rule in the event that there is an odd situation: all other things being equal, what would the budget-conscious shopper purchase? It might seem odd, but I found during the Gen 1 project that a grocer was having to increase store brand prices on items and wound up introducing a deep discount product line. Store brand butter and cereal was increasing in price so the grocer introduced an off-brand line to hold sales. After a short period, the store brand items completely disappeared. If I have to adapt, then that is noted and remains the rule for that item moving forward.
- In a universe of thousands of price points in thousands of stores, 108 data points is a wildly small sample. That means that if a store does not have that item (which for my purposes means that it not only is not on the shelves, but there isn’t even a shelf label), I will not use a substitute item but will simply not list that particular data point. If it’s not there, I won’t use it. This was only very rarely an issue more than five years ago, but it was problematic as to be unreliable during the chaos of the pandemic. It is frankly the big reason that I stopped the last project since I didn’t believe it to be reliable.
- If a product package changes in size, the price will be adjusted to what it would cost for the original package size. For example, the package size for store brand tomato sauce was 24 ounce in September. One store decreased its standard size to 23 ounces by October and that was priced; but I recalculated it to the appropriate price were it still in the 24 ounce jar.
And that’s it.
So what did I find?
In this generation, the baseline market-basket was priced during the first week of September, 2021. The average price of the basket was $90.79 and that became the baseline index level of 100.
The actual excel spreadsheet for 9/2021 is the first insert below. The spreadsheet for 10/2021 is the second insert below.
The average market-basket cost in October was $90.58, which is a decline of $.21 for an Index level of 99.77. Let’s call it statistical noise however, since it is only one month and it is notable in that one of the meat items (84/85% ground beef priced in five pound value packs) was missing from one of the stores. Since this particular grocer has more than one store in the area, I visited two others for the same grocer and that package was in none of them and my response was to simply omit it this month.
What is notable about the results?
- The Meat sub-index declined to 96.50 on the back of the unavailability of the ground beef in the one store; this is an admittedly small sample and the cost of the beef comprises an overly large percentage of the total cost of the basket so it can have an impact.
- The Staples sub-index likewise declined to 96.34 on the back of a drop in the average price of cooking oil from $4.08 to $3.62 per 48 ounce bottle and sugar from $2.39 to $2.29 per four pound bag.
- Both sub-indices for Produce (Fresh and Packaged) rose to 104.82 and 101.07 respectively. Fresh produce rose on the back of the average price of a three pound bag of Red Delicious apples from $4.02 to $4.48; this was attributable to a price increase at one store alone.
- As has happened before, one of the food data points underwent a packaging downsize, specifically a one ounce decrease for a jar of tomato sauce, from 24 to 23 ounces. I have recalculated the price of the jar to reflect what it would cost at the original size of 24 ounces.
What’s the takeaway?
I make no pretense that this is anything other than a very, very small point of datum in an ocean of data. But buying food is a universal experience and can be related to easily by 999 out of 1000 people. My intent is to apply a measure of scientific method to see what is actually happening and make it explicable to others so that when they hear politicians and pundits bloviating INFLATION! to instill fear, they can have a better sense of what’s happening.
Even better, use a search engine on this device that you’re reading and ask questions. Why are housing prices rising? Why is the price of gas rising? Then turn off the audio and read multiple linked articles for each question and come to a fuller, less fearful understanding.
20 ounce loaf Store Brand (SB) White Bread, 8 count SB Hot Dog Rolls, Box SB Spaghetti (16 oz)
Box SB Frosted Flakes (18 oz), Box SB Corn Flakes (15 oz), SB Quick Oats (39 oz)
Gallon SB Milk (2%), Quart SB Vanilla Ice Cream, Cheese (# deli sliced American), SB Parmesan (8 oz), # SB Butter
SB Coffee (11/11.3 oz) package, 2 L SB Cola
3# Red Delicious Apples, # Bananas, 5 # Russet Potatoes, Single head Iceberg Lettuce
# Sliced Deli Cooked Ham, Dozen Lg SB Eggs, # 84/85% Ground beef in five # package, Can 5 oz SB Tuna in Water, 44 county Value Pack Gorton’s Fish Sticks, # Chicken Thighs
SB NFC Orange Juice (52 oz), Cans SB Peas, Green Beans, Corn, Kidney Beans, Diced Tomatoes, Tomato Sauce (24 oz), SB Creamy Peanut Butter (28 oz), Strawberry Jam (2 #)
Rice (2 #), SB Cooking Oil (48 oz Canola), Sugar (4#), Flour (5#)