everybody panic!!!

There is an excellent article in the magazine Farming about folks unexplained freak-out over rising food prices. You can read the whole article here http://farmingmagazine.com/article-6505.aspx Now if you live in the developing world where families spend 50 or 75 percent of their income on food, this is probably warranted and indeed a hardship. But in America, the article says, food prices have hardly risen at all, inspite of some increase in commodity prices. It's easy to say (as Sara Lee does) that the cost of flour for the company's loaves of bread has gone up 40% and make that sound dramatic. But in reality there's 11 cents worth of flour in a loaf of bread. The cost of that flour has gone up to 15 cents - well there's your 40% increase. If Sara Lee wanted to pass that cost on to the consumer, the price of a loaf of bread would go up 4 cents. The article quotes the Wall Street Journal in saying "the first 9 months of 2010 showed average annual inflation rate of .6 percent."

The author then goes on to compare the purchasing power of the dollar in 2009 to the purchasing power of the dollar in 1933. He does a good job explaining a few of the ways economists do this and then settles on the multiplier of 17. It took 17 dollars in 2009 to buy what 1 dollar bought in 1933. Then, using that, he does a few comparisons.

Gas
1933 gas .18/gal
1933 cost in 2009 dollars 3.06
Cost today 3.20

Electricity
1933 TVA power 1.6 cents/kwh
1933 cost in 2009 dollars 27.2 cents
Cost today 8.5 cents.

Milk
1933 cost of a gallon of milk in Atlanta GA 49.6 cents.
1933 cost in 2009 dollars 8.43 (that's what I'm talking about!)
Cost today 3 dollars

Eggs
1933 eggs 39.5 cents/dozen
1933 cost in 2009 dollars 6.72/dozen.
Cost today 1.49/dozen

The article has more examples and goes on to further enforce the point that food costs are not at an all time record high no matter what consumers want to believe.