Prices and Spending

A couple of inflation numbers were recently announced, Consumer Price Index (CPI) and Producer Price Index (PPI). Both show inflation may be moderating. However, this morning retail sales were reported and showed an increase of 1.3%. In other words, prices are coming down while consumers are still buying. I believe this is a good sign because it means that we may indeed have a soft landing and that rising inflation may be behind us.

I compared this data with my own experience yesterday as I did my bi-weekly groceries. Pre-covid, I averaged about $230 per trip and I thought that was a lot. Yesterday, I spent nearly $320 for the same items. I felt that $90 dollar difference and it sucks! I feel the pain of inflation, but still need to purchase my usual food items for my family.

My optimism hasn’t waned, prices will start to trend down as we work to get back to a normal economy. I’m looking forward to the day when I’m not spending 40% more for the same amount of groceries. As we get back to a pre-covid economy, company earnings should improve and competition should increase. As competition increases, advertising should come back strongly. It’s one of the reasons I’m keeping an eye on Google.