Thursday, September 08, 2016

Deflation is always good. RIGHT? Said in the most sarcastic way.

Food deflation woes hit Kroger in new 'grocery price war'.

"Supermarkets such as Kroger are facing a pickup in food deflation, which is hurting top-line growth and igniting what Credit Suisse this week termed a "grocery price war."

"Food-at-home prices fell in July by 1.6 percent from a year ago, marking the eighth consecutive month of declining food prices, according to the government's Consumer Price Index for food measured by the Bureau of Labor Statistics. Categories showing the most deflation in July were eggs, followed by beef and pork.

"The current landscape is now beginning to look a lot like 2009, when meaningful deflation resulted in an industry price war and multiple quarters of declining earnings," Credit Suisse analyst Edward Kelly said in a note Wednesday. He said the "price war of 2009/2010 carried on for three to four quarters before abating."

I mean, all this saving on gas and food - we should be doing way better than we are. Right? Except in deflation wages never really rise.  Saving a few dollars on food here and there doesn't make up for that. Additionally - we seem to be forever stuck in 2009. It's like when there is an earthquake and the clocks stop at the time of the quake. It's kinda what happened to our economy.

The UK is having some pretty tough food deflation. I think it's close to 10% right now.

I know I'm sort of sending mixed signals. I think deflation could get pretty intense by the end of the year. However, the economy is sick enough and not enough new businesses have been created that when that happens.... hold on to your hat.


  1. Food prices and gas lower right before the election, what a crazy thing to happened. If the govt didn't play such an active role in the food supply, the prices would be a lot more trustworthy as an indicator. df

  2. Yeah. Agree. The fact that it's happening in spite of government control is telling though.