July Consumer Price Index

The Lempert Report
August 17, 2022

Sally:  Phil. You were just participating in a story with Good Morning America. Do you wanna tell us about that? 

Phil: Sure. Basically what we did is we took a couple, here in Los Angeles. We brought them to a Ralph's supermarket. We took their shopping list, their typical shopping list, and we had them shop three times. The first time, what happened is they shop the way they normally shop and it came out to be just under a $170. Then I spent some time with them and told them how to shop using store brands and some other hints that brought it down to about half. They saved about $65. Then I sent them back in the store to use their frequent shopper card and look at the circular and they saved another 20 bucks. So all in all, we cut their shopping list in half from a dollar standpoint. And we also timed them the first time they went shopping. It was 22 minutes, which is the average that somebody spends in the store. 

Phil: The next time, when I really asked them to read labels, look at net weight and so on, it increased their time about 11 minutes. So basically, in 11 minutes they made 60 bucks. And it was a great segment. It's on the GMA website and it's really a terrific reminder for all of us that we need to be more thoughtful. When we go shopping, the other hint that I gave them is what we talked about last week, that when you write down a shopping list, versus typing it, they had typed it on their computer, you become more thoughtful about it and, you know, they said, "oh wow." You know, never, never quite thought about that. So yes, especially in today's era with inflation, we really need to help people learn how to shop better. 

Phil: And as we talk about the consumer price index, if we look at the past 12 months at home, food went up 10.9%. Now year over year butter's up 26.4%, eggs up 38%. That's one of the hints that I gave them too, because they always bought brown eggs. And I said to them, what's the difference between brown eggs and white eggs? They had no clue. And then I told them that there is no difference. It's basically brown eggs come from hens with brown feathers and white eggs come from eggs with white feathers. But it can cost a dollar or a $1.50 more. Coffee's been up 20%, cereal and bakery up 15%, fruit and vegetables 9.8%, dairy 14.9%. So we really need to use all those hints that, that we can. And there was just a survey that I got this morning from Stata, where Americans plan to cut back in the face of inflation. 39% of us are saying, we're gonna cut back on bar, cafe and restaurant visits. And then another 35% of us say that we're gonna cut down on food or household goods. So you know, people, even though the economy is looking better, and even though with the inflation reduction act, people are feeling better, still why waste money? 

Sally: Yes. I definitely need to take you shopping with me, Phil. That would be great. I'm so glad to hear that Good Morning America and you are helping people learn how to shop smarter, because yeah, it is good to see those fuel and energy costs coming down, which we are seeing, but that food, those food prices are just not coming down yet. And so hopefully some of these efforts will help consumers and hopefully there will be some things in the inflation reduction act to help Americans as well. 

Phil: Yeah. And the important thing, if we look at the inflation numbers, the good news is everything was down except for food. Food was up July to June about a half of a percent, which is lowest it's been, but it's gonna take a while to fix the supply chain. There's no question about it. Whether we look at climate change, labor cost, transportation, all of those things. So, you know, you mentioned the inflation reduction act. The good news is that it passed, providing extensive tax breaks for clean energy, authorizes Medicare to negotiate prices of certain prescription drugs. We've all talked about that. We're on track with this bill to reduce carbon emissions by about 30% by 2030, as compared to back in 2005, 370 billion in tax credits over 10 years for solar and wind producers, as well as for the purchase of electric vehicles. Lots of great stuff about this. In fact, the political economy research Institute at the university of Massachusetts at Amherst says that new legislation in this bill could create more than 9 million jobs, just in the era of the environment over the next 10 years. But also there's some things that were left out. 

Sally: Yes, there are, and there are some really good things in this. And one of the things that I really appreciate about this bill, Phil, and I know you do too, because we talk a lot with farmers and we talk a lot to people in the agricultural industry. And as we are facing so many issues related to climate change right now with the drought in California, with the flooding in Kentucky, you know, farmers are facing a really hard time right now. So there's going to be 20 billion for a 10 year period in this bill that will be allocated to help farmers defray those costs for conservation. So that means, you know, if they wanna use cover crops in the winter to keep the soil healthy, or if they want to implement some ways to keep soil and fertilizer from eroding during storms if they want to help protect the bees and the insects that are beneficial, then this money is going to let them is going to give them that opportunity to cover those costs. 

Sally: So that is really excellent for farmers, but yes, there are some things that are being left out. And I think one of the main things that people might be criticizing about it is that, you know, during the pandemic, we learned so much about food hardships in this country, especially with our minorities and the inequities there. And something that had originally been included in the build back America act earlier that is part of this was that they were going to allocate a lot of money to provide free lunch and breakfast to kids in public schools all over America, which is very important. We all know that a lot of these kids that, you know, are living in poverty, this is the opportunity they have to eat a healthy nutritious meal, but that did not get included. It got left out this time. And I think there's some disappointment in that supporting what we have really learned about the food hardships in America and fighting hunger. 

Phil: Absolutely. And, and hopefully, you know, what this bill has done is hopefully open up the door, both on climate and on, you know, food nutrition programs and so on. So that it's the beginning of it not, not the end of it.The other thing that I found really interesting going through the bill in more detail, which hasn't been talked about a lot is that it also gives $500 million to help gas stations retrofit their pumps to take fuel containing 15% ethanol, rather than just 10% ethanol. And, if you recall, oh, this goes back probably about two years ago on Farm Food Facts, we talked to the CEO of POET, https://www.buzzsprout.com/282590/8850823 which is one of the biggest ethanol, producers, I think, in the world. And he talked about if, if they could up it from 10 to 15%, ethanol in our gasoline, the impact, on the environment in a positive way would be huge. So lots of good things. It's still a story that's evolving that we have to understand a lot more, but kudos for, you know, for the Senate and the House passing the bill. And I think it's gonna help us all.