QE & Your Food Budget

My daughter, Jackie, called the other day to ask if I’d purchased ground buffalo meat from Costco in the last week. I had not and asked why she wanted to know. It seems the price had jumped three dollars a pound. The last time Jackie purchased ground buffalo it was $5 a pound. The meat was presently priced at $8 at the Costco near her.

The next time I was in Costco, I checked the price. It was $8 a pound. I called her and told her to “get used to it.” This is only the first of many price jumps in food.

According to official stats, America’s inflation rate is only around 1-2 percent, so there’s no problem. Really? The government’s official inflation rate is based on annual changes in the consumer price index (which excludes food and energy costs). This is very misleading.

Economists, like John Williams of ShadowStats.com, pegs inflation at a much higher 8.5 percent! If you have been in a grocery store lately, you know that Williams’ assessment is closer to the truth.

1) QE
Add to the current inflation, the Federal Reserve’s most recent expansion of the money supply, dubbed “quantitative easing” or QE. (QE is just plan ol’ inflation.)

QE isn’t taking Ally by surprise. She’s been saving.

Bill Gross, a global investment manager, says the Fed’s latest action (QE2) may result in the U.S. dollar losing 20 percent of its value! You can expect BIG increases in just about everything during the next couple of years due to QE. You know the stimulus bills have to be paid sometime. (Bush added $4 trillion, then $10 trillion has been added so far under Obama.)

If there are no new taxes (you can’t convince me there won’t be), then inflating the dollar will do the same. The only surprise to me is that the Federal Reserve managed to wait this long. I thought for sure we’d be hit hard by inflation last autumn.

QE translates into BIG increases in the price of everything from food, utilities and gasoline.

2) Oil
Speaking of gasoline, if QE wasn’t enough, the price of oil continues to rise. Oil prices threaten our already damaged economy. Oil prices have edged closer to $100 a barrel in recent weeks and Brent crude hit $98 a barrel today. (Update: For the balance of January, crude oil fluctuated between $80 and $85. February 3 it rose to $103 a barrel and then settled just below $90 the next day. The oil market is sure to continue it’s rise.)

When the price of gas goes up, you pay more to get to work, take the kids to school and go to the grocery store. Not only are you paying more to get “there”, but when the price of oil goes up…so does EVERYTHING else. Everything we purchase is trucked to the store, so any increase in the price of gas is passed to the consumer (you).

3) Food
World food prices rose to a record in December on higher sugar, grain and oilseed costs, the United Nations said. The price of oilseeds, cereals and sugar was at a 30-year high. Add to that, US grain stockpiles are the lowest in 30 years. Just about everything is up according to The Business Insider: Beef 23%; Salmon 30%; Coffee 45%; Barley 32%, Sugar 24%, Oranges 35% and Wheat 63%.

Other than “getting used to it” there are some things you can do to prepare. It’s not too late, if you act now. My next blog is Prepare for Food Inflation. Also you can check out the blogs to the right of this page in the Food Storage category.

For information on long-term food storage,
Click Here.

Easy Food Storage Solutions


One thought on “QE & Your Food Budget

  1. Nonna Joann says:

    This was sent to my email address, rather than left in the comment box. I thought Andrew made some very good points, so I’m adding his comments here:

    “You may have left out the most significant factor that will lead to higher food prices — well, at least higher produce costs. Last week thanks to Michelle Obama, over 50 million public school kids (39 million for lunch and 11 million for breakfast), must now be served FRESH fruits and vegetables for every meal. Sounds great — anything for the children right?

    The superintendent of the St. Louis school district said it will cost him $25 million per year that he doesn’t have. He’ll have to take it out of the classroom (fewer books perhaps). The problem he said is that kids want to eat at school what they eat at home… and that ain’t veggies. The vast majority of the fresh fruit and veggies served now goes into the trash. He said he’s going to have to budget in far more trash pick-ups to haul away all the fresh fruits and veggies that the kids won’t eat. I’m all for kids eating healthier, but this is a huge unfunded mandate that will cause our food prices to skyrocket.

    On top of that, with 50 million more servings per day of fruit and veggies, the cost of produce is going to go up, up, up — some say 15% more this year than it was going to go up anyway.

    ABC News did the most slanted report on this. They said “proponents say any cost is worth it”. They pointed to Massachusetts where they did this and kids lost weight. The problem is that no one actually measured how much fresh fruit and veggies were being consumed. They most likely lost weight because they go away hungry, rather than eat the food they don’t want to eat.

    ABC, NBC and CBS reported on this new law. NO ONE talked about how much extra trash the school districts will have to pay to haul away what the kids won’t eat, AND not even a mention of how this will force up the cost of produce — not just for us, but for the rest of the world since we export a lot of food. Only Fox News had the guts to bring someone on to mention these unintended consequences.”

Leave a Reply

Your email address will not be published. Required fields are marked *