According to the United States Department of Agriculture (USDA) Food Plans Report for December of 2018, average Americans spent $245.00 per week on a moderate cost food plan for a family of four, comprised of two adults (19-50) and two children (6-11). In January of 2019, this same family spent $245.90 per week on a moderate cost food plan. As you can see, the difference is less than a dollar, compared to a year ago when USDA reports the change from December 2017 to January 2018 to be almost a $1.50 jump.
What is the difference between now and a year ago? Why has the cost of food in the U.S. not changed very much in a month when costs were projected to rise? Could it be the quality of food has changed in the last 30+ days or could it be something else?
If you were thinking about the quality of food, particularly produce has declined, this is true. Due to extreme weather conditions, the 35-day government shutdown throughout most of January, and higher tariffs, American farmers have seen a decline in production of goods and poorer quality — true and these are not due to conditions that are in their control. However, this is not the reason food costs have not risen substantially in the last six weeks, at least not with regards to how crops are planted and harvested. Weather is a contributing factor, but not the exact reason.
Some readers might be thinking about the cost of fuel, specifically natural gas and oil, impact the cost of goods and services where fuel is necessary for transport or to make products. This, too, is a fact. As fuel costs rise and decline, so will the costs of goods. Still, this is not the reason food costs have remained virtually unchanged between December 2018 and January 2019. However, it is not the exact reason for low to no increases in food costs, but it is related.
So what is the exact cause? The answer to that question in inflation! Yes, inflation is the reason our food costs have pretty much remained the same since December 2018.
Inflation in January of the new year was low in China, Canada and in the United States. The U.S. Bureau of Labor and Statistics (BLS) attributes this to what the Wall Street Journal calls “volatile energy prices.” According to the U.S. Energy Information Administration (EIA), energy volatility “is used to describe price fluctuations of a commodity,” in this case, fuel or energy sources.
The EIA finds many consumers are “extremely limited in their ability to substitute other fuels when the price, of natural gas, for example, fluctuates.” This fluctuation is dependent upon some of those aforementioned factors like weather, government shutdowns that affect subsidies to producers of energy and those industries where fuel is essential to the production of good and services, fuel storage costs, imported fuel, constraints of delivery system like pipelines, and a volatile stock market that is affected by rumors, speculation, corporate buyouts and trading decisions. As a result, inflation in January remained unexpectedly low. This is despite a 2018 projection that inflation rates would skyrocket in 2019, inflation in the U.S. only raised a marginal amount, 0.2 percent, according to The Statistics Portal Statista. Overall, inflation is trending downward in what is called disinflation.
The Official Data Foundation published this graph of “historical inflation rates is generated using the average yearly value of inflation since 1913, as reported by the U.S. government Bureau of Labor Statistics.” They’ve defined U.S. inflation as “the rate of change of the Consumer Price Index (CPI).” The inflation rate for February 2019 stands at 1.55%, according to BLS. Inflation can only be examined or discussed in comparison on contrast over time. Therefore, to say that the cost of a service has not changed, this is over time, despite fluctuations and variances.
“In 2019, price growth may continue to remain low at the grocery store. Food-at-home prices are expected to rise between 1.0 and 2.0 percent, as potentially the fourth year in a row with deflating or lower-than-average inflating retail food prices. Several products could continue to see lower prices, including pork, other meats, eggs, fats and oils, processed fruits and vegetables, and nonalcoholic beverages. Beef and veal, poultry, fish and seafood, sugars and sweets, and other foods are all expected to increase but at rates lower than their 20-year historical averages.”So, what does this mean for your bottom line? It means that when you go to the grocery store, that carton of eggs and that gallon of milk will cost more by only pennies if even that. You may find that the cost of those products your family consumes the most are no more expensive than they were at the end of last year. Zacks.com says consumers can expect this to remain throughout the duration of 2019.
Groceries aren’t the only thing to be impacted by the lack of inflation last month.
Have you noticed that the cost of gas for your car went down? It has! A USA Today article finds 2019 to be a year where motorists find their fuel costs to be on the decline after three years of increases in cost beginning with January. The average cost of gas was $2.35 in January and will likely be the lowest cost this year. This is good news for the hospitality and travel industries. Low fuel costs for cars means Americans will have more disposable income this spring and summer to plan vacations.
Also, the cost of energy to heat your home this winter didn’t escalate during the coldest weeks of January where much of the country was impacted by a polar vortex. J.P. Morgan projects the rest of 2019 will look pretty much the same in terms of home fuel costs, not just in America, but low home heating and fuel costs with trend lower globally.
What’s the bottom line? Overall, not only was inflation virtually unchanged in January of 2019, but Americans can expect inflation to remain fairly low throughout the year. These low rates of inflation will manifest in marked price decreases in certain goods and services — particularly if natural gas, oil, and other fuels are required for production or delivery, your dollars may go further on basic necessities and your disposable income for entertainment and travel may see a boost over the next few years.
What are your thoughts on the Low Inflation in January? Don’t hesitate to discuss! Comment below, or shoot us an email. If interested, please send your thoughts to Outreach@ConsiderTheConsumer.com, find us on Twitter, Facebook, Instagram, LinkedIn, or even connect with us directly on our website! We look forward to hearing from all of you.
About the Author: Aisha K. Staggers is a writer, lecturer, and co-host and producer of “All Our Own” radio show and podcast and co-host of “Staggers State of Things” on the Dr. Vibe Show. Her work has been featured on MTV News, HuffPost, Blavity, Atlanta Blackstar, For Harriet, New York Review of Books and a host of other first-run publications and syndicated outlets. Find her on Twitter @AishaStaggers. For more of her work, check out her page here!
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