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Inflation and the world price of poultry

The price of domesticated birds has soared high

Serving poultry at the global Thanksgiving dinner table is 20% more expensive than a year ago. Global food prices in general peaked in the middle of 2022. They’re coming down now, but they’re still 3% higher than they were a year ago.

The FRED graph above shows data on the global price of poultry (blue line) and food in general (red line). Notice that the source of the data, the International Monetary Fund, serves up each data series in a different unit: U.S. cents per pound of poultry and an index with a value of 100 in 2016 for the price of food overall.

Because poultry prices are nested in the broad category of food prices, it should come as little surprise that both price series took flight at the same time in the late part of 2020. However, the global prices of other types of food, such as shrimp, are now lower than a year ago and are contributing to the decline of the composite food price index.

That composition effect is at play at the Thanksgiving dinner table for an average urban consumer in the U.S. According to the Bureau of Labor Statistics, those serving poultry alongside meats, fish, and eggs are paying 8% more than last year.

Lastly, if you care for tofurkey, notice that although the global price of soybeans has risen alongside the price of poultry, a soybean-based dinner with the same amount of calories provided by turkey is 41% cheaper.

How this graph was created: In FRED, search for and select “Global price of Poultry.” Click “Edit Graph” at the top right corner and navigate to the “Add Line” tab. Search for “Global price of Food index” and click “Add data series.” Gobble, gobble.

Suggested by Diego Mendez-Carbajo.

Astonishingly different inflation across goods categories

Not all prices have increased in the same way during our current burst of inflation. This obviously holds true for specific, individual prices, but there are also marked differences when you look across broad categories.

The FRED graph above shows the three major categories of durable goods, nondurable goods, and services.

  • Durable goods (in red) led the charge back in mid 2020 and have had the highest percent changes of the three categories so far. Now this price inflation is strongly declining. A large component here are used and new cars.
  • Nondurable goods (in blue) have had more inertia, but this price inflation has started declining as well.
  • Services (in green) have flown under the radar, but these prices are showing no sign of decreasing and may soon be the category with the highest inflation rate.

This phenomenon isn’t new. The second FRED graph expands the series over the entire available period, back to 1956. If you look at the level of the CPI instead of its growth rate, you notice that the CPI for the three categories has widely diverged since the mid 1980s. Durable goods have lower inflation, which is thought to be the result of tremendous technological advances, particularly in information technology. Services benefit the least from productivity enhancement, as they have a much larger share of labor inputs, so these prices always increase more than prices for goods.

How these graphs were created: In FRED, search for and select “CPI non-durables.” Click “Edit Graph,” open the “Add Line” tab, and search for and select “CPI durables” and then “CPI services.” Restrict the sample period to start in January 2020. Then change the units to “Percentage change from previous year” and apply this to all lines: “Copy to all.” For the second graph, use the first graph but show the full series (back to 1956) and change units to “Index 1982-1984 = 100” and select “Copy to all.”

Suggested by Christian Zimmermann.

The Cass freight index

FRED absolutely, positively has the data on shipping

The volume and value of transportation services can serve as an indicator of overall economic activity. Goods produced in any one part of the country are consumed all over the U.S., so producers and consumers are connected by freight shippers. The business activity of those domestic freight shippers broadly reflects the buying and selling of goods in the economy.

The FRED graph above shows the percent change from a year ago in the volume of shipments (in blue) and in the value of their related expenditures (in red). The data are reported by Cass Information Systems, Inc., in the form of an index going back to January 1991.

Shipments and expenditures generally increase and decrease at approximately the same time during economic expansions and recessions. That’s to be expected, because freight movements reflect overall economic activity and that activity changes during the business cycle. However, there are multiple occasions during economic expansions when the shipping index remains constant or even declines. Perhaps more interestingly, there are extended periods of time when the expenditures index grows at a noticeably faster rate than the shipping index does.

Between May 2020 and the time of this writing, the expenditures index doubled in value while the shipment index increased by a little more than a third. In fact, since May 2021, the shipment index experienced almost no growth while the expenditures index kept on rising. Congestion of freight services and rising fuel costs may deliver the explanation here.

How this graph was created: In FRED, search for “Cass Freight Index: Shipments.” Next, click “Edit Graph” at the top right corner and use the “Add Line” tab to search for “Cass Freight Index: Expenditures” and click “Add data series.” Edit Line 1 by using the “Units” dropdown menu to select “Percent Change from Year Ago” and click “Copy to all.”

Suggested by Diego Mendez-Carbajo.

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