Whatever you're spending on this year's Memorial Day barbecue, you can expect next year’s to be even more expensive. The USDA forecasts that beef prices will rise between 5.5% and 6.5% by the end of 2014, after already increasing just under 10% so far this year. Overall food prices are projected to rise at between 2.5% and 3.5%.
Blame droughts in California, Texas, and Oklahoma for the rise in the cost of meat. TheCalifornia drought may cause price spikes in other foods foods – think broccoli, lettuce, bell peppers, almonds, and raisins – but it’s unlikely to noticeably alter current projections for broad food price inflation.
The odd thing about rising US food prices is that inflation elsewhere is very, very low. The Fed keeps missing its inflation target and the head of the Minneapolis Fed Narayana Kocherlakota thinks the Fed will keep missing its inflation target until 2018.
There isn’t, says Matt O’Brien, any reason to fear inflation. In fact, Paul Krugmanargued in 2012 that more inflation would help the economy. At the time, the Fed’s favored measure of inflation stood at 1.2%. It is now 1.2%.
Yet inflation feels like a problem to many people. The Guardian’s Greg Jericho thinks we are simply not very good at aggregating and averaging the price increases and decreases in the dozens and dozens of purchases we make. Instead, we tend to focus on a few noticeable price increases and overlook sometimes substantial price drops.