2012-09-03

A Comment to Scott Sumner

There is some question as to whether Scott Sumner ever denied that food price inflation was happening circa-2010. I have been unable to post the following comment on his blog, so I am posting it here.

Here's the original post.

Here's my comment:
Where in commodity prices does it explain why my grocery bills keep going up every month, while package sizes continue to decrease?
And here's what Sumner said in reply:
Ryan, Are you the congressman? Seriously, inflation is quite low in the US. If you are paying more, maybe you are buying more expensive types of food. I’m not seeing much inflation, and I lived through the 1970s so I recall what high inflation was like.
He was missing my point. He thought I was stating that core or headline inflation were increasing. Really what I was saying is that I buy food, but I do not really buy commodities. So food price inflation hits me much harder than commodity price "disinflation."

This is what I (and others like me) mean when we say that money is non-neutral. NGDP targeting is good for people who buy lots of commodities and bad for people who predominantly buy food. Perhaps this is part of why Sumner has such a divergent view of China from Balding.