What your PPI graph shows is that it was sky high for the whole pandemic. More than 20%! That’s far higher than CPI inflation. Really, prices should’ve soared!
Also, PPI seems to be an index of raw materials for manufacturing; it’s focused on tracking costs of manufacturing inputs, not so much up the chain. In a service-oriented economy like the US, it’s not a very relevant statistic.
You really think restaurants are getting their food from some secret marketplace where everything is 90% off?
The only reason it didn’t go up 20% is you can’t get blood from a stone so they had to take a haircut on their profits. Click the food tab, you can see there has been an annualized ~5% deflation for most of a year now. That’s the point. Inputs don’t determine retail costs, they charge as much as they can.
And yes, restaurants do buy from wholesalers. The chart I liked is specifically intermediate inputs. If you’re so ignorant about the way things work that you think restaurant owners are going to the grocery store, I don’t know what to tell you.
Obviously. And always have. They have always got a good deal for buying bulk and setting up long-term contracts. But when food costs go up, wholesale costs go up too. If that weren’t the case producers would prefer to sell to customers instead, so companies would have to offer more to get the raw materials they need.
You don’t think the ‘greedy’ food production industry is gonna raise their prices for restaurants? You think Tyson Foods is giving their corporate customers 50% off the price they could be charging?
Or are you saying that food prices have fallen (i.e. Tyson et al are charging lower prices), but that all the restaurants in America, along with all the grocery stores, are conspiring to keep prices high for consumers? And no single mom & pop shop is like, hey, we could lower our prices to our old pre-pandemic profit margin and make a fucking killing by being the cheapest store/restaurant in town? You think all the little places complaining about upstream food costs are lying? Or is there some kind of line drawn, where some small stores & restaurants get the shitty prices, but at a certain point they get the secret conspiracy pricing?
You don’t think the ‘greedy’ food production industry is gonna raise their prices for restaurants?
It doesn’t matter what I think, or what you think. The intermediate PPI I linked is what they’re paying. And what they’ve been paying has seen annualized deflation of ~5% for most of a year now. Why? I’m not sure. Maybe because we can’t stop eating but restaurants can close their doors if their profit margins disappear so their demand is more elastic. It doesn’t make sense for suppliers to drive their customers out of business. Maybe it’s something else, it doesn’t matter. They’re paying what they’re paying, and what they’re paying has been deflating at 5% annualized for a while.
Or are you saying…all the restaurants in America, along with all the grocery stores, are conspiring to keep prices high for consumers?
No need for a conspiracy when there is a lack of incentive to do anything else. Why would they ever charge less than we’ll pay?
And no single mom & pop shop is like, hey, we could lower our prices
Have you not been paying attention for the last 40 years? Small business in competition with giant corporations have to run razor thin margins to stay competitive. And if one did manage to find a little fat to cut, Walmart et al. will just run at a loss until they’re gone.
As long as we can pay, they’ll charge more. Where is the money coming from? I don’t know, maybe it’s the increased savings rate during COVID I read so much about, maybe something else. For things with inelastic demand people will deplete savings and run up credit cards. Once that money has been extracted…blood, stone, etc. The prices will come down, but not until maintaining them is literally impossible. Anything else would violate fiduciary responsibility to the shareholder.
What your PPI graph shows is that it was sky high for the whole pandemic. More than 20%! That’s far higher than CPI inflation. Really, prices should’ve soared!
Also, PPI seems to be an index of raw materials for manufacturing; it’s focused on tracking costs of manufacturing inputs, not so much up the chain. In a service-oriented economy like the US, it’s not a very relevant statistic.
You really think restaurants are getting their food from some secret marketplace where everything is 90% off?
The only reason it didn’t go up 20% is you can’t get blood from a stone so they had to take a haircut on their profits. Click the food tab, you can see there has been an annualized ~5% deflation for most of a year now. That’s the point. Inputs don’t determine retail costs, they charge as much as they can.
And yes, restaurants do buy from wholesalers. The chart I liked is specifically intermediate inputs. If you’re so ignorant about the way things work that you think restaurant owners are going to the grocery store, I don’t know what to tell you.
Obviously. And always have. They have always got a good deal for buying bulk and setting up long-term contracts. But when food costs go up, wholesale costs go up too. If that weren’t the case producers would prefer to sell to customers instead, so companies would have to offer more to get the raw materials they need.
You don’t think the ‘greedy’ food production industry is gonna raise their prices for restaurants? You think Tyson Foods is giving their corporate customers 50% off the price they could be charging?
Or are you saying that food prices have fallen (i.e. Tyson et al are charging lower prices), but that all the restaurants in America, along with all the grocery stores, are conspiring to keep prices high for consumers? And no single mom & pop shop is like, hey, we could lower our prices to our old pre-pandemic profit margin and make a fucking killing by being the cheapest store/restaurant in town? You think all the little places complaining about upstream food costs are lying? Or is there some kind of line drawn, where some small stores & restaurants get the shitty prices, but at a certain point they get the secret conspiracy pricing?
It doesn’t matter what I think, or what you think. The intermediate PPI I linked is what they’re paying. And what they’ve been paying has seen annualized deflation of ~5% for most of a year now. Why? I’m not sure. Maybe because we can’t stop eating but restaurants can close their doors if their profit margins disappear so their demand is more elastic. It doesn’t make sense for suppliers to drive their customers out of business. Maybe it’s something else, it doesn’t matter. They’re paying what they’re paying, and what they’re paying has been deflating at 5% annualized for a while.
No need for a conspiracy when there is a lack of incentive to do anything else. Why would they ever charge less than we’ll pay?
Have you not been paying attention for the last 40 years? Small business in competition with giant corporations have to run razor thin margins to stay competitive. And if one did manage to find a little fat to cut, Walmart et al. will just run at a loss until they’re gone.
As long as we can pay, they’ll charge more. Where is the money coming from? I don’t know, maybe it’s the increased savings rate during COVID I read so much about, maybe something else. For things with inelastic demand people will deplete savings and run up credit cards. Once that money has been extracted…blood, stone, etc. The prices will come down, but not until maintaining them is literally impossible. Anything else would violate fiduciary responsibility to the shareholder.