I've kept a price book for many years where I log in the price of foods I purchase on a regular basis, and nearly everything is up, and some are up substantially, as many of you have shown in your lists. If fuel prices start going up, then all bets are off for stable food prices, guaranteed....

Was it just January eggs were .79 a dozen at Aldi? Yep. I use powdered eggs more often than not these days (purchased in #10 cans from Honeyville Grain).

I would suggest everyone take advantage of any and all food "bargains" (especially ones that have a long shelf-life and are foods you like) and do some home food storage because it's supposed to only get worse according to the National Inflation Association (see link below). I fear my $150/month food allowance won't go far next year.

It took me 18-months to build a year's worth of food in storage when I started it 3 years ago (on a $50/week food budget). Now the food in my storage room is worth more than if it was in the bank earning that piddly amount of interest, because of rising prices.

A year from now will I be posting recipes for how to make "fake meat" from wheat flour or vital wheat gluten because meat is too expensive? I purchase vital wheat gluten in #10 cans (3.5 pounds/1588g) from Honeyville Farms and have them in storage so we have a good, inexpensive, protein source. I currently mix ground gluten 50/50 with all ground meat (sausage, ground turkey/beef), and make ground gluten into a high-protein "cereal".

I just finished adding 25-pounds of a variety of seeds for sprouting to my home food storage so we have a source of biogenic (life-generating) fresh food we can grow in our kitchen. That's on top of hundreds of pounds of wheat and other grains/beans/seeds in storage. When lettuce is no longer affordable, we'll be using alfalfa sprouts to top those sandwiches. I always use sprouts in the winter because "fresh food" really ISN'T fresh. I also grow wheatgrass and juice it.

The Seven Survival Foods

-Grains
-Legumes
-Sprouting Seeds
-Sweetener
-Salt
-Oil
-Powdered Milk (preferable in #10 cans)

Everything after that in storage is bonus food, and much welcomed when prices go up.

Anyone else remember the story of the Grasshopper and the Ant?

-Grainlady

Here is a link that might be useful: NIA Projects Future U.S. Food Price Increases

Oh my gosh, Grainlady, you are so prepared. That is a great list for the rest of us who want to learn more about storing food. Could you post a picture of your storage room for tips on organization.

Thanks,

Jo

I can't imagine where I'd store that much food, but it sure is a good idea to do so if you can. Right now, I'm pressed storing 3 extra people in my house, lol! However, I can do my best to follow your great advice, Grainlady. As for lettuce, why not grow some of your own? Can you make a little greenhouse or cold frame to grow it in the winter? My problem is I can't grow it in the summer here as it's too hot, so I'm dependent then on store bought lettuce.

What has been confusing me about food prices lately is the inconsistency. Take the above mentioned butter prices. Why is butter and cheese so high, and milk so cheap right now? There's a milk war going on here, where most stores have milk at 99¢ a gallon, but yes, house brand butter is on sale at $2.99 a pound. It doesn't make sense to me.

Sally

Our butter is often on sale for $2.99 for the store brand.
Coffee has jumped. Maxwell House was often on sale for $3.97 less than a year ago. It's advertised now for $5.99. I used to buy President's Choice (a major store brand) for $6.99, it's now advertised for $9.99 as a sale.

What irks me is the pricing Plus the sizing. Don't shoot me or kick me off the forum, but I do buy margarine. They are now making margarine in 427 gram tubs (.09 lb).

I'm sure butter will follow suit. I don't think they should mess with baking ingredients.

I wasn't feeling well when I made yesterday's post & in reading over it this morning I've noticed a mistake that makes quite a bit of difference. I posted that Nature's Promise 2% Milk is $3.49/ga. I wish. My math is terrible. It's $3.49 for 64 ounces. Duh, that's 1/2 ga.! :(

/t

jojoco -

Sorry, I haven't a clue about how to post a picture. We have several types of shelves that are available at Sam's Club and home improvement stores in a room in the basement. Nothing fancy. Under beds is a good place for food storage. I read of one person who stacks boxes (#10 cans usually come 6 cans to a box) and then places her kids mattresses on top. She doesn't use a bed frame at all. Up the sides of closets is also another storage place. It's all about being creative. You can take steel or plastic trash cans, store food inside, place a round sheet of ply-wood on top and cover it with a round tablecloth and use them as bedside stands or end tables.

I will give this advice -- store food you can make food with and avoid commercially prepared foods as much as possible.

By that I mean, store an assortment of pasta, rather than boxes of Hamburger Helper or Mac and Cheese, and make your own from scratch. Powdered cheese is readily available, as well as freeze-dried cheese.

You can make many more things from basic food items, and they are generally less expensive, than pre-packaged processed foods.

Examples:
--Powdered milk - I make cocoa mixes, pudding mixes, whipped topping, homemade kefir and yogurt, some kinds of cheese, sauce mixes, homemade ice milk, all cooking and baking as well as drinking.

--Tomato powder - replaces cans of tomato sauce, tomato paste, tomato juice and is used to make spaghetti sauce, taco sauce, pizza sauce, add it to soups, homemade pasta, etc.... (http://www.thespicehouse.com/spices/tomato-powder) Add to that home-dehydrated tomatoes and some in the freezer and I have the world of tomatoes pretty well covered with the right spices and other ingredients.

--Wheat - The list of things I make with wheat is much greater than what I can make with flour alone, and wheat will keep for decades (when properly stored). Not only do I mill it into flour, I sprout it, grow it for wheatgrass, cook it whole and use it as a cereal/snack food/added to chili, grind it to make farina (Cream of Wheat), cracked wheat, I make my own bulgur. You can wash the bran and starch out of whole wheat flour and make "fake meat" (gluten) out of it. I can flake it with my flaker mill.

Following information at www.suegregg.com, you can use whole wheat berries to make pancakes or crepes, whole corn to make corn bread - all without the aid of a mill. She's famous for her blender recipes.

I have three layers of food storage.

1. 72-hour Emergency Foods - food that doesn't require heating or refrigeration.

2. Pantry Foods - things I use for everyday food preparation (6-months to 1-year).

3. Long-term Foods - Freeze dried fruit/vegetables/meat, home dehydrated fruit/vegetables, grains/seeds/beans, #10 cans of milk, etc...

-Grainlady

Awesome advice grainlady. I have one question though.

How do you rotate your storage and keep track of what you have where? Keep in mind I'm the one who found breast milk in the back of the freezer when the kid was 12. (12 YEARS old, not months LOL)

When I saw the photo recently posted by coconut-nj of his wife Christy holding two enormous heads of cauliflower I decided to have cauliflower for dinner. At the supermarket I selected the smallest one available. Unlike the ones displayed by Christy, this one was about as large as two fists held together. It weighed two pounds. At the price they were charging, $2.99/pound, it would have cost $6.00. I put it back.

My impression is that the price of fruits and vegetables has increased dramatically in the past two or three years. Other foods not so much.

Interestingly, while I write this I am hearing a discussion of inflation and rising food prices on the radio.

Jim

Along with discussions such as this one, the entire nose to tail thing, 100 mile diets and such I'm also reading and hearing about a new-found interest in root cellars.

One of our national newspapers recently had a significant piece on them.

I sort of have one, two barrels submerged in the ground, one for orchard apples that almost lasts until next harvest and one for local potatoes.

I'm semi-seriously thinking on making a large one, right next to the permanent smokehouse. Sort of a walk in room, only dug into the ground. My issue is moisture control, we have a creek behind us and everything flows towards it.

Sorry, I had a link out to a neat plan.

Here is a link that might be useful: Root cellar...Root house?

Posted by metaxa, "---My issue is moisture control, we have a creek behind us and everything flows towards it. "

There are many ways to moisture proof and water proof.

BTW, the root cellar linked is not a very good design.

dcarch

Jim,

Cauliflower is exactly the same here at $2.99/lb. Organic is $3.49/lb.

We've been eating our own fingerling potatoes since July but DH bought Russetts this week. They were $4.99/5 lbs. We should have planted more fingerlings & we could have cut our calorie intake & saved some money by each having one baked fingerling w/sour cream & chives! lol

/tricia

Some things have stayed the same and others are going up like crazy. Pretty much all fresh produce unless it's on special is high. I've noticed especially onions that used to be dirt cheap(no pun intended) are now about $2 a lb. used to be 2 lb for $1.00. Coffee is NUTS!!!!!!!! Toilet paper (I know not food but still) have gone through the roof! Sugar is sky high, butter is crazy high. Bread is about $4.00 a loaf which is nuts! Of course you can find most of these things on sale for good prices so as a result, I have huge hoards of food in my basement! HA! OH I forgot, sodas...my gosh, is anyone still drinking those things? Used to be about $2.00 a 12 pack, now about $4.50 a 12 pack. Only buy on sale too! It seems like I spend all my time finding sales these days just to make ends meet.

There are many ways to moisture proof and water proof.
I live in a temperate rain forest, we know moisture control up here. I've been driving in the rain with folks from away who freak right out about driving in such a storm, lol.

My "issue" is that our topography, the lay of the land and the glacial till it is made of so close to the shore is designed to rapidly flush surface and ground water away, to the sea. My creek runs a twenty minute walk to the ocean, I have major water, both surface and ground, flowing through. so regardless of any methods used, it will be an issue as soon as i go more than a foot or so down.

You want moisture in a root cellar, iirc around 90% humidity for most storage crops. The best (neatest) root cellar I've ever seen was my grandparents, it had a spring right in the rock floor. They were able to keep butter and milk in the spring.

BTW, the root cellar linked is not a very good design.

How about a link to a better one for a typical urban yard?

Later on, I will move to "Conversations" to continue.

"Root Cellar ideas"

FOAS can be nasty if I hijack his thread. :-)

dcarch

FOAS can be nasty if I hijack his thread. :-)

Come on dcarch, you know me better than that! Please hijack away. I'm quietly reading all responses with great interest. In fact conversations such as this always get me wondering how to create a below ground "root cellar" best suited for general storage. Are ideal conditions similar to wine cellars? Two for the price of one?

loves2cook4six -

I have a theory... we are either organized, or we're not - something in our genes (LOL). I'm an organized person, while my mother was completely without the skill. Whether we are, or not, you just have to find a system that works for you because wasted food is the most expensive we purchase! I've tried several methods until I found one that fit ME.

I've also rearranged things several times to make it easier to track. I just went through a large-scale shift this last week.

I used to have some racks where you put the new can in on the top and took the oldest stock out of the bottom, but I hated them because the next can you buy might go in the middle of the 5 cans in the rack, according to use-by date, not the end of group. I gave the racks to a friend who primarily purchases case amounts and doesn't worry about a mix of dates.

There are computer programs that many people use, web sites that will track your home food storage (http://www.trackmyfoodstorage.com/), but I found a printable inventory sheet on-line that works for me. I keep them in a 3-ringed note book. I also go through the accumulation every few weeks. My eyes are still a great tool. I can either glance at the inventory sheets or the food item themselves when I'm taking out or adding to. There are two cans of pinto beans that are getting close to the use-by date, so I've included chili on this weeks menu. A jar of peanut butter will be made into peanut butter cookies and peanut butter granola. I literally shop-at-home for menu planning.

On the inventory sheet there are 10 boxes after the line for each item. When I add something to storage, I put a slash (/) in the number of boxes of added items. When I take something out of storage and put it in the kitchen or pantry, I cross out the box (\) by finishing the "X". Some items I also put a use-by date (month and year). So the block might look like this: 2/12, and when I take the item out I'll add an (\) to cross the whole thing out.

I write the use-by date on the front and on the top of canned goods with a Sharpie so they are easy to see and rotate them. Some people use colored dots and others used colored rubber bands.

I'm careful not to purchase large quantities of any one item at a time. With only two in our family, I need to be sure I can reasonably use 12 of something by the use-by date, so I will generally purchase food items at rock bottom sale prices and add 2 or 3 of something at a time.

Some items are only purchased once or twice a year. I purchase nuts primarily after the holidays when they are greatly discounted. A 5-gallon (1,280 loads) bucket of Charlie's Soap (for laundry) will last me 3-years. When I have enough un-spent money accumulated in the food budget, I'll purchase a case (6 #10 cans) of "milk" powder, or perhaps buy 50# in bulk with a friend and split it. I buy large quantities of wheat twice a year. I may be nearly out of canned peaches by the time fruit goes on sale at the end of the summer, which is when I usually stock-up on those. I know we'll use at least 24 cans in a year.

I also keep control by limiting the amount of space for things to begin with. At one time I had bars of bath soap in 3 different areas. Now I have a plastic storage container for soap. When it's full, that's all I buy. A container for deodorant, shampoo, etc... Keep like kinds of things together in one plastic storage container.

Know how many of something you use. I often date an item to see how long it takes us to use it and keep that information in my Price Book. Why have 15 jars of grape jelly when you really only use 4 a year. We use one 16-ounce jar of peanut butter each month. I have 8 jars, or enough to get me through July. The last jar has a July use-by date, so any additions will have to have a use-by date past July.

-Grainlady

Well, since it's open for discussion...

We had a root cellar when we lived in Ely, Nevada. It was dug into the side of a mountain in our backyard. There was a thick wood door. Inside, wooden shelves lined the walk-in cellar on 3 sides. There were 4 shelves & they were 18-20" apart, IIRC. The walls were dirt/rocks. There was no electricity & I was scared to go out there alone. Mom would sometimes send me for something & I'd take my dog for protection from the ghosts that surely lived in there! :)

Ely is a very dry climate but I remember the root cellar as moist & cool. The mountain was quite tall - guess I should call it a hill but it was several hundred feet to the top where my tree house was. The base of this hill was right in our yard. The cellar & house were built in 1862 for a family with 11 daughters. The place was a local landmark. Over the decades, it had been turned into a duplex. That's why Dad grabbed the place when it came on the market. He used half for his office & we lived in the other side. It looked like a set prop for Gunsmoke. Actually, it still does look like Gunsmoke because it's still standing. Amazing.

So, do you have a hill you can dig into???

/tricia

Thanks FOAS. Here are some quick ideas for metaxa:

I travel to Vancouver frequently. I don’t think you have to worry about moisture that much. It is very wet in the winter time in Vancouver.

Some very quick thinking.

1. There is no need for a double door design in your climate zone. A well insulated door will be good enough. You will save a lot of construction cost.

2. The door should be located in the center of the aisle for more storage.

3. You will need a water proof floor because of the ground water issue.

4. You may need to go deeper for the foundation to avoid frost heaving of structure.

5. A heavy duty sump pump will be needed whenever your cellar floor is below ground level.

6. If you have ground water conditions, foundation drain tiles around foundation will be needed.

7. You may not need reinforced concrete wall construction.

8. You may want to look into a two compartment divided cellar for ethylene gases and odors control.

9. The up vent and down vent should be far apart, not next to each other.

10. You may want to have an electric heater to avoid a very cold spell from freezing your food.

11. All insulation will need to be vapor barrier type and moisture proof. Because there will be times when warm/cold side can be reversed. This is to avoid moisture condensing inside insulation.

12. Storage bins should not be larger than the door way.

dcarch

When I've toured open homes that have cold rooms, I always comment on all the food I can store there. The realtors always reply that people use them for wine cellars.

Grainlady, you gave some great tips for inventory.
I turned our 3rd bedroom closet into a pantry. Bought a bunch of the vertical storage cubbies and stack them on top of one another. I'm okay with organizing and knowing what I have in the cupboard, the freezer is another matter. :-)

I almost forgot, frozen veggies have pretty much doubled seemingly over night! UGH! And not only are they twice the price, the bags are no longer a lb.

I don't live in Vancouver.

"--Organic lawn, organic garden. Property backs onto a salmon bearing stream. Live in paradise at central, coastal Vancouver Island, B.C. ---"

Where do you live now?

dcarch

well...I live in central, coastal Vancouver Island, B.C.

I just bought 4 of these for my new pantry, the size called PantryPlus. They work great if you buy canned food in quantity, because they hold 10 of most cans in each opening.

Here is a link that might be useful: Shelf Reliance

Posted by metaxa "well...I live in central, coastal Vancouver Island, B.C. "

Paradise indeed.

I will be in Vancouver next month, and Calgary, then Toronto.

dcarch

I have given up most of my recreational cooking, those times when I really want to cook lots of thing, but don't want to eat the whole loaf - or whatever it is.

I used to stuff my freezer sanctimoniously with these treasures; cookies and breads for when friends stopped by or a night when I didn't feel like cooking. Well, few people stop by spontaneously (I don't prompt that in others!), and I always feel like cooking.
Fresh is always better, and I get to cook again!

It has cut down significantly on my grocery bill. And I rarely buy things that I know I won't use either. Yes, I used to do that all the time, thinking I would use them.
Quinoa anyone? Bulgar?

I do shop sales but it helps that I live in a small town, -county has 8,000- and all my grocery stores, including Aldi's are within a 1/2 mile strip. About once a month I go to the big town an hour away to specialty shops.

Um let's see back to my number check..

From what I noticed at Costco yesterday.

half and half 1/2 gallon was up about 50cents but the 1/2 g of whipping cream was up to $7 something from $5 something this summer and less than $5 last winter.

Butter went from $6 and change a month ago for 4lbs to over $9 yesterday.

Cheese has gone up a few cents, and cream cheese was $5.99 for 5lbs.

and Fletchers bacon was $3.70 or so a lb there..

I picked up two loaves of sandwich bread for the boys $3.39. But they are bigger loaves than the store for the same bread. Franz white wheat.

It was mentioned on our local newscast that I think it was Country Harvest sliced bread is now a smaller package, and the slices are thicker.
A lady makes a bunch of sandwiches for her church, and with the smaller packages and thicker slices, she's having to buy more bread to make the same number of sandwiches.

I went grocery shopping last night and noticed a huge price difference from when this grocery store opened four or so years ago. I felt guilty because I also cleared my fridge this afternoon and wasted too much with expired dressing, sauces, etc. Making my own will make much more sense. I also went to my garden to plant my garlic and found 2 zucchini's and one summer squash. More guilt. I thoroughly agree with Grainlady and either you are organized or not. I can get organized but it stops there. If I could stay organized I would waste a lot less. I think I will print this thread and post to my fridge! There are some good tips.

Holy Moly those can organizers are expensive! That's crazy!

arkansas-girl

There are instructions on-line for making rotating can racks out of cardboard at the link below. The price is certainly right!!!

-Grainlady

Here is a link that might be useful: Food Storage Made Easy

Here store brand 2% milk (in one store) is $2.48 for a gallon.
And $2.29 for a half gallon!
Go figure. . . .
So I buy a gallon, divide it into 2 half gallon containers and freeze one.
Works just fine.

When considering prices of everything over all,
Gas, clothing, etc.,
Even a 4% increase can hardly be considered negligible.
At least in my opinion.

This thread is interesting.
The differences in prices of like items in various parts of the country is thought provoking.
As are the various 'takes' on food storage.

Grainlady, you always have such good
down to earth,
no nonsense information to share.
And it is always presented in a friendly, generous way.
Thank you!

Rusty

That's a pretty cool website, Grainlady!

Sally

"And I rarely buy things that I know I won't use either. Yes, I used to do that all the time, thinking I would use them.
Quinoa anyone? Bulgar?"

OMG I am LOLing, literally! I jsut did a pantry cleanout and tossed a whole bunch of that sort of thing. Check the thread I am about to start - "Pearled Barley - why do I have this?"

LOLOLOL!

Alexa

Rusty -

You are very kind. I have the same personality as Dragnet's Sgt. Joe Friday - just the facts...(LOL)

Here's something to think about... We have 8.2% tax where I live. Our food budget is $150/month (2 adults). This means nearly one month ($147.60) out of 12 goes for taxes, not food.

Two years ago I was purchasing 25-pounds of wheat for $5. The same wheat purchased at the same place today was nearly $14. That's not negligible.

-Grainlady

I think Grainlady may be acquiring a new nickname. LOL!

Jim

Sorry I'm so late here, but I went to the grocery store today and here's what I found (new prices follow the old copied answer):

My own Organic Eggs: About 39 cents a dozen, but when I buy them locally they're $2 a dozen from any number of local farms. Right now I can get them for $1.25 a dozen
Land O Lakes butter, $2.49 lb/On sale 2/$4, but usually $2.69
King Arthur AP Flour - $3.29 5 lbs/still $3.29 5 pounds
Locally produced Pioneer or Big Chief sugar $1.28 4#/now $1.39 for a 4# bag
Quaker Rolled Oats $1.99/currently $1.79
Penzey's Pure Vanilla Extract: $5.29/2 oz./I didn't check this
Chocolate Chips - $1.49 12 oz. bag store brand (I don't notice much difference when used in fudge, etc.) OR
$1.99 for Hershey's/I bought Nestle's today, $1.99 12 oz.
Baker's Baking Chocolate (Semi-Sweet) - $2.29/4 oz. bar/still $2.29 for 4 ounces
White Chocolate - $1.29/4 oz. bar (from the Amish Store, unbranded)/ now $1.99 a 12 ounce bag
Rumford Baking Powder - $1.39/10 oz. can/today it was $1.19 but I didn't need any
Hershey's Cocoa - $2.79/today it was $2.89
Diamond Chopped Pecans - Beats me, I don't buy many/$6.99 lb.
Diamond Chopped Walnuts - $4.99 12 oz./bought some today, paid $4.99 a pound instead of for 12 ounces
Lemons (Fresh) - $.69/each up to over $1/got 3 of them for 39 cents each on Tuesday
Sun Maid Raisins - $3.19/15 oz. tub/crap, I knew I forgot something
Peter Pan Creamy Peanut Butter - $2.88/28 oz. jar/ now $2.99 a 28 oz. jar
Libby's Canned Pumpkin - $.99 store brand is even cheaper/today it's $1.89 a 15 oz can so I canned my own!
Banana's (Fresh) - $.59 per pound, I seldom buy them/still 59 cents
Ocean Spray Craisins - $1.99/today they were $2.19
Philly Cream Cheese - $1.39/on sale for $1.25, but usually $1.39
Sour Cream - $1.39/16 oz. tub/up slightly to $1.42 for 16 oz.
McCormick Poppy Seeds - darned if I know, I never buy them either. Still don't!

Annie

When the global economy turned down, demand for all sorts of things declined, while the supply remained the same, so prices went down. This was true for steel, gasoline, diesel, meat, other food, clothes, cars, etc. Remember the big sales during holiday 2008, the deep discounts on cars, how cheap top-grade beef got, how gasoline prices fell?

Producers reacted by cutting production and inventories. Farmers planted less crop, apparel companies made less clothing, automakers built fewer cars, retailers ordered fewer goods, etc. Not just goods, but the infrastructure to transport them. Trucking companies took trucks out of service, construction of new cargo ships was cancelled. Prices stabilized.

Then the global economy started recovering - faster in some countries than others, it is true. Demand started rising.

In the case of most manufactured goods, production could rise to keep up. Because the manufacturing capacity (factories) was still there and production could be revved up. But in some cases, it takes a while to increase production. Crops are planted annually. Slaughtered cows have to be replaced by calves. New container ships have to be built.

So while some things are fairly stable in price or still declining - TVs, computers - some things are going up significantly in price. Commodities are the prime example - look at cotton and wheat prices, etc - and that translates to food and next year will translate to apparel. Also diesel prices and container prices are rising which raises shipping costs.

It won't last. There is no structural shortage of, say, cotton or wheat. Farmers will plant more, the next year will have fewer droughts and floods, and we will be swimming in these agricultural commodities again.

Of course, there will always be some inflation. A small amount of inflation - a percent or two - is good. Because farmers and manufacturers have to borrow to invest in their businesses, and if prices go down it gets harder for them to pay for the debt (no-one lends with negative interest).

That is a good explanation of how things normally work in a market based economy, John. And I agree that a one or two percent inflation rate is healthy for the economy. Unfortunately, the Federal Reserve is now trying to artificially induce inflation. A lot of financial experts are afraid that could lead to hyperinflation, which would be disastrous. Already there are signs of currency wars shaping up. There is a lot of uncertainty in this situation.

To complicate the picture just a little more, the economics of food production is also distorted, compared to other products, by farm subsidies, price controls and the use of corn for making fuel.

Jim

Jim, those cauliflower Christy was holding were the very first of the season and that first weekend they were $3.99... each. Now that they are into full swing they're down to $2.99 each. Needless to say when Christy is off after Thanksgiving we'll be putting some more in the freezer.

We have a pantry closet in our kitchen that has one wall to the back porch and other parts that make it basically a cold room. I also use the back porch in winter to store veggies. The pantry closet has one wall that is all shelves and can hold quite a bit of canned goods. It generally holds enough for me to buy my canned staples in sufficient quantity when they're on sale to last until the next sale. You get used to how often certain things are on sale and buy accordingly.

Our basement has a brick floor over dirt and stays quite cool year round. Under the chimneys for the living room and dining room fireplaces there are those round topped brick storage areas built in. If I did more canning I'd use them, but I don't any longer.

Jim, the hyperinflation concerns are very, very remote.

First, there is still a lot of underutilized production capacity. Factory utilization is still low. Labor utilization is very low (i.e. unemployment high). Real estate vacancy rates high. Wage inflation is nil. This is the case in the US, Europe and as far as I know Japan.

Second, demand is recovering slowly. US GDP is growing maybe 2% per year. Retail sales going up about 2% per yr. European growth is slower. Japan is slower yet. The US, Europe, and Japan are the large majority of global demand for most goods and services.

Third, the money supply and money velocity is not rising fast. (Supply is essentially how much liquid cash and similar money is out there, velocity is the rate at which that money is moving around in the economy, you need both - a dollar sitting under a mattress is not doing anything to drive inflation or economic activity). People focus on the Fed's attempts to stimulate money supply and velocity. They forget that the Fed is trying to counteract the opposite (depressive) actions of the private sector. The Fed has driven interest rates low, but banks are holding back on lending, companies on investing, consumers on spending. Velocity is still low.

With supply of goods/services still ample, demand for same still weak, and no surplus of money supply/velocity, there is no realistic reason to expect hyper inflation or even very high inflation.

Inflation should and hopefully will move moderately higher in the coming year(s) - if it doesn't, that likely means a problem.

In certain types of goods - some food, some textiles, say - it may be quite a bit higher for a period. But those are a very small part of overall spending.

One country which is feeling the reverse is China. There growth in demand is high, supplies of labor are getting strained, supplies of materials are getting tighter (China's economy uses a disproportionate amount of commodities), and there is a lot of money being pumped into the economy and circulating fast in the economy. China has an inflation problem.

"Third, the money supply and money velocity is not rising fast."

The Fed is in the process of adding $600 billion to the money supply over the next few months. That is a pretty fast increase in the money supply. Even presidents of a couple of the Federal Reserve banks question the wisdom of doing that.

Jim

"----- There growth in demand is high, supplies of labor are getting strained, supplies of materials are getting tighter (China's economy uses a disproportionate amount of commodities), and there is a lot of money being pumped into the economy and circulating fast in the economy. China has an inflation problem. "

China's inflation is USA's inflation. Cheap Chinese goods will be over very soon.

What about India's growth, close to 10% now.

A billion people in China, a billion people in India, and all the other countries also rapidly getting richer. There is not enough to go around.

I would not be surprised that prices for all things, not just food, will triple in ten years.

dcarch

Jim, the money supply can go up but if velocity is down, it doesn't drive inflation. I've linked below to an article on this.

And how much is the money supply going up, really? The Fed is trying to drive up money supply, but the private sector is pulling it down. You can find charts of money supply, here is one: http://www.shadowstats.com/alternate_data/money-supply-charts
Money supply has declined quite significantly in the past couple years.

dcarch, no question the rapid growth of China and India is adding to demand. However, that growth is coming from a very low level. The consumption of goods and services by the average person in China or India is far, far less than the consumption of the average person in the US, Europe and Japan.

Use GDP per capita as a rough proxy for consumption. India is about $3,500, China about $7,000 vs US about $46,000, Western Europe and Japan about $35,000. China's population is 1.3bn, India's 1.2bn, US 311mm, Western Europe 500mm (use the EU), Japan 127mm. So we can get the GDP of each region.

Suppose China and India's GDP grows 60% in the next 5 years, which is 10% per year (about the current rate) while the US, Western Europe and Japan's GDP only grows 10% over the period or 2% per year (unfortunately, also about the current rate if not better). The result would be the combined GDP grows 24% over the period or 4% per year. (approximate, I don't have a spreadsheet here, just an iPhone and a pencil).

(We could use other proxies for consumption, like energy consumption per capita. Which is why I did the above as a per capita calculation, instead of simply starting with country GDP.)

Can the world supply 4% more ''stuff'' per year without driving inflation to very high levels? Overall, sure. There is plenty of production capacity in electronics and plastic molding and LCD screens to supply (far more than) 4% growth in iPhones and similar. There is plenty of assembly and component manufacturing capacity to supply (more than) 4% growth
in automobiles. Similar for concrete to make housing, fiberboard to make furniture, etc. 4% will not stress global capacity, especially after a deep recession as we've just had.

We'll see periods of volatility in some prices, as supply and demand adjust. Pork, rice, cotton, etc. This volatility will be upwards and downwards, but the price rises will get more media attention. Remember a couple of years ago, when rice was skyrocketing in price, countries were hoarding, everyone was talking about rice shortages? Rice soared to $22. Then it fell to $12, that didn't get much news. Rose to $16. Fell to $10. Rose to $14. Yet during the period 2008 to present, as rice price were cut in half, China and India have continued to grow and consume more of everything - and they eat a lot of rice.

The commodities that are soaring today will collapse the same way. Commodities are more volatile today, their prices moving more than fundamental demand-supply would suggest, because more investors are playing those markets, and financial money flows are huge compared to the relatively small commodities markets. In the end, fundamentals still control.

Here is a link that might be useful: Article

“------ dcarch, no question the rapid growth of China and India is adding to demand. However, that growth is coming from a very low level. The consumption of goods and services by the average person in China or India is far, far less than the consumption of the average person in the US, Europe and Japan. -----“

And there is the question. Their very low level consumption is rising rapidly, what is the impact? I happen to run into a fellow from China about two months ago. His function is here to organize the world’s largest luxury foods exposition in China. I forgot how many tons of Kobe beef he was trying to get.

“------Suppose China and India's GDP grows 60% in the next 5 years, which is 10% per year (about the current rate) while the US, Western Europe and Japan's GDP only grows 10% over the period or 2% per year (unfortunately, also about the current rate if not better). The result would be the combined GDP grows 24% over the period or 4% per year.----“

The question is, for a 10% growth in GDP, does that mean only a 10% inflation? I don’t know what’s the relationship. Is it possible that a 10% increase in demand in let’s say, meat, will cause a 100% increase in price?

If only half of a billion people in China want to double their beef consumption in the next two years, how much would that impact beef price worldwide?

This year, China will add 15 million cars on the road, and India’s demand is about a million a year. The rate of car ownership will increase drastically in the years to come for all these countries. What is going to happen to gasoline prices?

Anyone saw Diane Sawyer’s China report (ABC) the past few days? What about Obama's comments about China?

dcarch

I want to shop at Annie's stores!!!

Her stuff it quite reasonable..

Interesting and relevant thread.

Terri, the real deal this week is turkey. At Meijer's, if you spend $20, you can get $16 off a turkey over 16 pounds. Amanda bought a frozen turkey for the kids' birthday party tomorrow, a 20 pound turkey at $1.19 a pound is normally $23.80. With her $16 off, that bird cost $7.80, or 39 cents a pound.

Milk is on sale too, 2 gallons for $5, and Gold Medal Flour is 2/$3.

Our prices are good, but there is no selection. I can buy the store brand chocolate chips or Hershey's or Nestle's. That's it. Milk is Country Fresh or Country Dairy. It's small so there isn't much room for variety and certainly nothing "exotic", like Hoisin sauce or balsamic vinegar. We did just get Crisco brand olive oil, though, LOL.

Annie

Dcarch - The question is, for a 10% growth in GDP, does that mean only a 10% inflation? I don’t know what’s the relationship. Is it possible that a 10% increase in demand in let’s say, meat, will cause a 100% increase in price?

If demand for beef rises and supply doesn't rise, then beef prices can rise sharply. Then supply will respond - in one year ranchers can raise as much cattle as needed. (Maybe not Kobe cows.) Demand will also adjust. Restaurants will reduce beef portions, substitute pork dishes, I will eat more chicken. And beef prices will come down. Ultimately, consumption may be higher, but production will be too. Unless something holds down supply or prevents substitution.

See chart, feeder cattle futures. In ten years, plenty of volatility but overall only about 2% per year inflation.

Here is a link that might be useful: Feeder cattle futures