Whenever the Federal Reserve speaks or the talking heads at CNBC open their mouths, all we ever hear is that inflation levels are depressed, and that essentially everything is falling in price. The Bureau of Economic Analysis (BEA) pegged the consumer price index (CPI) at pretty much zero. The Paul Krugmans of the world actually believe prices aren’t soaring.
The Bacon Cheeseburger Index, calculated by the Convergex brokerage firm, suggests that inflation has in fact risen by 7.7 percent over the past year. The methodology behind this number? The price of bacon cheeseburgers across the United States.
Here is what exactly has been shooting up in prices when it comes to creating a yummy bacon cheeseburger:
- Ground beef prices have soared 17 percent.
- Cheese prices have gone up 7.3 percent.
- White bread prices have increased 3.4 percent.
- Bacon prices have risen 0.2 percent.
“Yes, declining energy prices have pushed the headline CPI to flat year over year,” the company wrote. “At the same time, when the Federal Reserve surveys consumers on their expectations for annual inflation the numbers still come up +2% or more. One important reason is the cost of food, which we summarize with the Bacon Cheeseburger Index. Year over year inflation for this all-American slice of cholesterol heaven is running +7.7%, led by ground beef inflation of +17.3%. Yes, we know the Fed can’t make more cows or milk or pigs… But consumer attitudes regarding inflation are anchored in their shopping cart, as anyone who lived through the 1970s will tell you.”
So, what’s the conclusion? Price inflation isn’t here if you don’t eat, live under a roof or wear clothing.
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