Food prices have been dropping for longer than any time since 2009, and before that, 1960. For 9 months, food prices have been dropping, and the drop is accelerating. That’s good news for buyers. That’s bad news for sellers. The drop in commodity prices is now being reflected in food prices. Discounters are discounting enough to encourage mainstream sellers to drop their prices. Shoppers are becoming aware and delaying purchases as they shop for better bargains, which they are more likely to find. The drop in prices is a benefit to the poor. While more affordable food is worth celebrating, there is a growing concern that falling food prices that are following falling commodity prices are also evidence of deflation. Deflation is scarier than inflation, economically. Negative interest rates could also be a sign of deflation. Housing, health care, and education continue to inflate; which is a balance of sorts systemically, but we may be witnessing a bifurcation of the economy by industry. In the meantime, at least we can eat more cheaply.
(Click on the chart for the link.)
“Grocery Prices Are Plunging” – Bloomberg
Pretending Not To Panic 