Inflation is a much cussed and discussed topic today – cussed by the American people and discussed by the politicians. The cost of living is an everyday experience. While I do not need the government to tell me how the cost of living has increased, the most recent data for July is now available. To be honest, I question whether the officially reported inflation figures align with what we are experiencing. But beyond that, the cures to inflation presented by Washington, D.C. are of greater concern.
On July 5, 1971, I was with a group of high school students present in the White House to witness President Richard Nixon signing the 26th Amendment to the U.S. Constitution which lowered the voting age to 18 years old from 21 years old. One month later, August 15 and 53 years ago, President Nixon announced he was “ordering a freeze on all prices and wages throughout the United States.”
For those of us who lived during the high inflation period of the 1980s, we should be asking if the government intends to repeat that disastrous economic period of U.S. history. The result of Nixon’s announcement to employ a freeze price regulated by a Pay Board and Price Commission 53 years ago was soaring inflation. Core inflation, which excludes food and energy, averaged 12% in 1980, 10% in 1981, and 7% in 1982.
For July 2024, core inflation was pegged at a year-over-year gain of 3.2%. At the same time, the CPI for food prices was reported to be up 1% from a year earlier. It does not sound that bad until we look at the rest of the story. The July 2023 CPI for food prices was up 4% from the prior year which was compared to the July 2022 which posted a 13% increase to the prior year.
Yes, it is no secret that food prices are sharply higher and politically, a price freeze might be a popular idea in an election year. The reality is that it would be as disastrous as during the second half of the 1970s and the 1980s. What would seem to be a quick fix is simply adding fuel to the fire.
Beef demand is currently strong, a noteworthy goal that the industry has worked hard toward achieving since 2015. The pork industry has experienced a similar increase in demand, though perhaps not quite as strong as beef demand currently. Notable in the pork industry has been the demand for bacon. How many hamburgers are purchased in fast food restaurants that do not have bacon? Not many.
Consumers want to purchase quality, safe, beef and pork products and those beef purchases are at record prices. Imposing government mandates on supermarket pricing would be negative and is highly likely to take us back to the late 1970s and 1980s. Consumers can make the purchasing decision. They don’t need the government’s help!
John Nalivka is president of Sterling Marketing, Inc., Vale, Oregon.
