The average American family
spends between 10 and 14 percent
of their annual income on food.
The lower your income, the higher percentage is spent on food. Presently, Americans spend less of their annual income on food than any other nation.
The National Inflation Association (NIA) calculations fall right in the national average. They say American families currently spend 13 percent of their total annual expenditures on food and they spend 34 percent of their total annual expenditures on housing.
NIA projects by the year 2015, Americans will be spending as much as 40 percent of their annual expenditures on food. That’s quite a jump in a few short years!
Jacob doesn’t like the idea of food inflation.
This is from NIA’s November 5 news release: “During the months of September and October alone, just in anticipation of the Federal Reserve’s quantitative easing announcement, cotton prices rose by 54 percent, corn prices rose by 29 percent, soybean prices rose by 22 percent, orange juice prices rose by 17 percent, and sugar prices rose by 51 percent. Wheat prices are also up 36 percent since the beginning of July. Despite these huge increases in commodity prices, according to the U.S. Bureau of Labor and Statistics (BLS)’s consumer price index (CPI), food prices only rose 0.3 percent in September. (BLS October CPI report will be released on November 17th.)
NIA believes real price inflation in the U.S. is already 5 percent and the recent spike in agricultural commodity prices along with Bernanke’s just announced $600 billion in quantitative easing will send the real inflation rate back up to above 10 percent in early 2011. Once Americans wake up and realize just how rapidly the U.S. dollar is being debased, NIA believes we will see a rush out of the U.S. dollar that could eventually trigger an outburst of hyperinflation. To read NIA’s special U.S. food price projection report by Click Here.
William R. Hawkins (consultant specializing in international economic and national security issues) rejects NIA’s conclusions. Hawkins says, “The “printing” of $600 billion to buy Treasury securities will not spark even moderate inflation, let alone the kind of hyperinflation some commentators are screaming about like Chicken Little.”
He goes on to argue, “The Federal Reserve Bank of Philadelphia’s Survey of Professional Forecasters has concluded that the median projection for the annual average inflation rate for personal consumption expenditures over the next ten years will remain close to 2 percent.” For Hawkins’ entire summary: Click Here.
Couldn’t have two more opposite conclusions, now can you? I suggest that you take a few minutes and read both reports for yourself. It’s my opinion Hawkins is wrong about the current level of inflation. He doesn’t take into consideration the way we calculate inflation has changed. Just as the way we calculate unemployment changed. Everyone knows the actual rate of unemployment isn’t the 9.6 percent given, but most likely double that. A recent article in the Denver Post explained why unemployment would stay at 9.6 in 2011 even as jobs increase. When people, who have previously dropped off the government rolls and are no longer receiving benefits, begin to look for employment once again, they will once again be counted. This will keep the percentage of unemployed constant.
In fact, NIA’s report states the present inflation rate is not 2 percent as Hawkins states, but actually 5 percent. NIA explains the reported inflation rate is altered by geometric weighting. Geometric weighting gives a lower weighting to goods rising in price. I don’t pretend to fully understand it, but it’s reassuring that someone does.
It’s wise to be prepared for any unexpected emergency. The worse outcome from a well-stocked pantry is that you purchased your food on sale. Next year at this time, I will be very happy if we don’t experience runaway hyperinflation or even an intensifying double digit inflationary recession. If we do, will you be prepared?
Coming in Thursday’s blog are practical kitchen items to combat food inflation. You’ll want to read: Holiday Gifts That Keep Giving.
Have you made emergency plans for your family?
What if the grocery store shelves were empty?
Click Here for information about eFoods Global long-term food storage products.