You're not alone if you're feeling budget-pinched this year for Christmas. Americans across the country are paying more for everything this holiday season. But the category they're paying the most on is the Christmas dinner. Fox Business reports, "Christmas meals will cost 16.4% more this year." That's double the previous year.
The report analyzed categories like stuffing mix, corn, green beans, frozen apple pie, whipped topping, butter, cranberry sauce, bone-in spiral-cut ham, egg nog, homestyle biscuits, russet potatoes, white frozen young turkey and homestyle roasted turkey gravy." The data showed "biscuits had the highest price increase year-over-year, rising 47.7%. Butter and russet potatoes weren't far behind with prices rising 38% and 32.6%, respectively."
It's another data point in how inflation has impacted every part of Americans' daily lives. But what's true for the consumer is also true for the supplier.
General Mills released its 2023 projections, looking at things like inflation. While you'll see the White House tout things like slowing inflation, General Mills CEO Jeff Harmening sees no relief ahead. General Mills raised prices throughout 2022 and has more price hikes on deck for 2023.
In a call with investors, Harmening said," 'Decelerating to double-digits is not exactly zero,' Mr. Harmening said, referring to expected levels of inflation for the second half of the company's fiscal year. 'As we look at our business, we'll continue to look at pricing.'"
The Wall Street Journal pointed to rising costs as the reason for the price hikes:
Packaged-food giants, including Kellogg Co., Kraft Heinz Co., Conagra Brands Inc. and Mondelez International Inc., have for months been raising prices, saying the moves are necessary to offset their own climbing costs for ingredients, transportation and labor. General Mills has taken other measures to improve its profitability, including changing packaging and sizes to charge more per ounce.
That last sentence, companies changing packaging sizes, is better known as "shrinkflation." If you feel like packaging or portion sizes have shrunk recently, you're likely correct. It's not just that you're paying more; you're paying more for less at the grocery store.
The consumer and supplier are feeling similar budget pinches. What's true for them is also true for the seller. Walmart, Target, and Costco all told a similar story this month. Executives at those stores reported "a shift in consumer spending as food and gas prices remain elevated. Shoppers have given priority to spending on food and other necessities, more often forgoing toy, furniture and other discretionary spending."
Another reason inflation relief seems unlikely is that Congress is pushing forward more new spending. Analysis of the $1.7 trillion omnibus spending bill noted that "the bill still raises nondefense, nonemergency spending by 8% and defense spending by 10% next year—above current inflation of about 7%—according to the Committee for a Responsible Federal Budget. So at the margin the bill adds to, rather than subtracts from, demand and inflation pressure."
The journalist in that piece observed, "Inflation is the economy's number one problem. The Federal Reserve understands this and has adapted accordingly. Congress and President Biden still haven't."
While Congress didn't pass as much spending as they would have liked, they still increased spending. And Biden is set to sign that new spending into law. Between the COVID-19 relief plan of 2021, the infrastructure act, the Inflation Reduction Act, and now the omnibus spending bill, Biden continues to pour new spending into an inflationary environment. Claiming inflation is a top concern, while pouring gasoline on that fire is poor leadership.
That new spending is coming at a time when the economy is approaching a tipping point. The Federal Reserve is trying to measure whether they've hiked interest rates enough to cool inflation. Economists increasingly believe a recession will define 2023. No one knows how deep the recession will be, just that there will be one.
And here comes Joe Biden with more fuel for the inflation fire. The economy continues to ask for help on the supply side, and all Biden wants to do is increase demand through more spending. If you're looking at the grocery bill for that Christmas dinner or other items, there's one person to blame.
With the economy teetering on the edge of recession, Biden's decision to spend more will have an impact. The Federal Reserve would like to slow down the rate hikes, but if Biden increases demand, he could force more rate hikes.
The initial issue of inflation wasn't Biden's fault. Like most presidents, he had to deal with the hand dealt to him when he entered office. But the decision to prolong inflation through increased spending is Biden's fault. It's the gift that keeps on giving, and Biden has gifted America another Christmas with high inflation.