Paying more and getting less is what you always get when you put the government in charge of delivering anything, including the medium of exchange. From Michael Maharrey at schiffgold.com:
In the Federal Reserve’s new world of “transitory” inflation, Americans are paying more to get less.
Retail sales were up 0.6% from May to June. According to the Commerce Department, American consumers spent $621 billion on retail goods and services last month. With the big 1.7% drop in May, retail sales remained below levels in March and April.
Meanwhile, price increases in June far outran the increase in retail sales. In fact, they outran retail sales for the entirety of the second quarter. Consumers paid significantly more in every retail category.
- Food bought at stores – up 0.8%
- Prices at restaurants, delis, cafeterias, etc. – up 0.7%
- The price of gasoline – up 2.5%
- Durable good prices including appliances, electronics, autos. furniture, etc. up 3.5%
These were price increases in just one single month. Overall, CPI popped 0.9% month-on-month in June. So far this year, prices have risen 3.6%.
Since retail sales are expressed in dollar amounts, they reflect rising prices. In other words, just because dollar widget sales increase doesn’t mean people bought more widgets. It could be that they bought fewer widgets but paid more for them. This is exactly what’s happening in many retail sales segments.
Consider gasoline, for example. Gas station sales rose by 2.5% in June to $47 billion. But the price of gasoline also rose 2.5% in June. That means consumers bought about the same amount of gasoline in June as they did in May, but they paid more for it.
Food and beverage store sales ticked up by 0.6% in June to $75 billion. Meanwhile, the CPI for food bought in stores jumped 0.8%, Again, consumers paid more to get less.