Australia, and food prices again.
The blog the Big Picture is wondering aloud whether food prices are helping out the retail sales numbers for Wal-Mart. With very good reason, too. Wal-Mart will report ex-energy sales, but no ex-food. One cannot help but think their company-aggregated 2.4% increase in sales (ex-energy) for the year are bouyed more than somewhat by the price of foodstuffs.
That price, by the by, is up 4% for the latest quarter alone, and 8% for the year.
WASHINGTON, D.C., July 12, 2007 – Retail food prices at the supermarket increased slightly in the second quarter of 2007, according to the latest American Farm Bureau Federation Marketbasket Survey. The informal survey shows the total cost of 16 basic grocery items in the second quarter of 2007 was $42.95, up about 4 percent or $1.61 from the first quarter of 2007.
Of the 16 items surveyed, 14 increased, one decreased and one stayed the same in average price compared to the 2007 first-quarter survey. Compared to one year ago, the overall cost for the marketbasket items showed an increase of about 8 percent.
In particular, the necessities.
Regular whole milk showed the largest quarter-to-quarter price increase, up 34 cents to $3.46 per gallon. Sirloin tip roast increased 27 cents to $3.99 per pound; pork chops increased 22 cents to $3.63 per pound; ground chuck increased 20 cents per pound to $2.85.
I’d say it serves you right for drinking dairy-milk, but I doubt the cost of soy is going down while the value of everything else appreciates. There are a couple of other interesting pieces in that article, concerning the price differences for milk of different fat-quantities (is that right? I haven’t had dairy in a very long time), as well as the declining share of supermarket food revenues that get to farmers.
In Australia, meanwhile,
The Australian Food and Grocery Council is warning consumers of further food price rises due to drought, floods and rising production costs.
The council, which represents manufacturers and processors, says some fresh food prices will fluctuate with weather conditions.
But chief executive Dick Wells says production costs including the price of irrigation water, livestock feed, fuel and fertiliser are expected to keep rising.
Again, the necessities in particular:
Consumers could be paying up to 25 per cent more for a litre of milk and other dairy products within the next six months.
National Foods Limited, the country’s largest processor of drinking milk and dairy products, said wholesale prices for milk and dairy foods would likely rise between 20 to 25 per cent in the half-year period.
To return, then, to the Kevin Rudd/supermarkets story. Milk is hit quickly because drought, directly (to the cow) and indirectly (via the feed) have an impact, as well as feed, directly, transport, etc. It’s expensive, basically (I’ve an idea! Leave them the hell alone. Okay, I’m not completely serious about that).
Politically, the Prime Minister is stuck. He can’t call an election today – he’d have his ass handed to him (recent polling showed the Prime Minister losing his own seat of 30 years), but to wait longer means more of this information. Another quarter’s inflation figures should verify what ordinary households are experiencing already: their rent is up, or their mortgages are up (‘distressed’ households – who spend more than 30% of income on housing – are increasing in number); their petrol costs are up; and their ordinary grocery bills are up, probably most of all. Families can cut back to generic brands on most goods, but force a household with 2 teenagers to do that and see if their parents vote for you.
So Howard is running into an election with the trifecta: the cost of keeping your house is going up; the cost of working at your job is going up; and the cost of feeding yourself, your family and the cat, dog and budgie is going up. And this doesn’t even include the cost of revolving debt, which is (the debt) also increasing – and ought to increase still more as we try to hang on to the same standards of living with seriously diminished purchasing power.
As it stands, Team Howard/Costello cop a lot of political hits, just by being incumbent at a time like this. For Rudd to win, of course, he needs to convince the electoral that he and his party can do something about it. The very fact that he is talking about it, while Howard/Costello use inflation figures that go out of date each week, if the newspapers (which everybody else reads) can be believed. I still think discussing his supermarket plan in terms of price-gouging is just silly – that is what the ACCC does, for Heaven’s sake. There’s no reason why it won’t work well enough to win an election, though.