Does the press ever tire of underestimating Sarah Palin? The latest to assume that Palin doesn’t research her topics is — surprisingly — the venerable Wall Street Journal, and on the equally surprising topic of economics. When Palin objected to the Fed’s second round of “quantitative easing”, otherwise known as “printing more money,” on the basis that American consumers already see enough inflation at the grocery store, reporter Sudeep Reddy scoffed that Palin had no clue and that inflation had been non-existent. Where could Palin have come up with the idea that prices have been rising for supermarket shoppers?
So, imagine my dismay when I read an article by Sudeep Reddy in today’s Wall Street Journal criticizing the fact that I mentioned inflation in my comments about QE2 in a speech this morning before a trade-association. Here’s what I said: “everyone who ever goes out shopping for groceries knows that prices have risen significantly over the past year or so. Pump priming would push them even higher.”
Mr. Reddy takes aim at this. He writes: “Grocery prices haven’t risen all that significantly, in fact.” Really? That’s odd, because just last Thursday, November 4, I read an article in Mr. Reddy’s own Wall Street Journal titled “Food Sellers Grit Teeth, Raise Prices: Packagers and Supermarkets Pressured to Pass Along Rising Costs, Even as Consumers Pinch Pennies.”
The article noted that “an inflationary tide is beginning to ripple through America’s supermarkets and restaurants…Prices of staples including milk, beef, coffee, cocoa and sugar have risen sharply in recent months.”
In fact, the Wall Street Journal noted that food prices have gone up faster than inflation, although perhaps the language was too obscure for Reddy:
Food prices are rising faster than overall inflation.
Or … maybe not.
The consumer price index for all items minus food and energy rose 0.8% over the year to September, the lowest 12-month increase since March 1961, the Bureau of Labor Statistics said. The food index rose 1.4%, however. The U.S. Agricultural Department is predicting overall food inflation of about 2% to 3% next year.
The WSJ reports that increased demand from China has created more competition for agricultural products, which means price increases. That’s good news for farmers, but not necessarily good news for consumers. Steadily increasing gas prices will also contribute to higher food prices as the cost of transporting goods increases, although it’s not as noticeable as it was in 2008, and the WSJ doesn’t mention transportation costs at all.
The problem isn’t that this current inflation rate is somehow historically large. It isn’t, as Reddy and the original WSJ article notes, although retailers are already having problems in getting consumers to purchase goods in normal quantities because of it. The point Palin made was that taking a voyage on the QE2 would make a difficult issue for consumers and retailers much worse through the deliberate introduction of even higher inflation, an explicit motivation behind the Fed’s actions.
So Palin was right once again, and once again a reporter winds up with egg on face from starting out with an assumption that Palin couldn’t possibly know what she’s talking about. Lather, rinse, repeat.