Inflation

[The Atheist]

I'm sure it must be a Boomer thing.

Take a serious thread on a serious subject and turn it into a discussion on the most first-world issue you could possibly come up with.

 

[Thermal]

You might have missed it, but the derail was not about coffee. It was about misreporting of inflationary stats, and downplaying it fairly dramatically. You really missed that?

 

[The Atheist]

You might have missed it, but the derail was not about coffee. It was about misreporting of inflationary stats, and downplaying it fairly dramatically. You really missed that?

100%. It's not very relevant. Inflation isn't applied evenly, so anomalies exist. Big deal.

Petrol is a classic example. I don't pay for it, so I don't care how much it costs and the inflationary effect oin me is whatever inceased logistics cost accrue to things I do or buy. Points of a percent.

The family 2 km down the road whose dad earns $25 an hour and who's seen petrol increase 40% doesn't get the same benefit and his inflation rate might be 7 or 8%. To and from work, maybe to and from schools as well - it wouldn't be hard to be a massive number

Lies, damned lies, and statistics. (definitely Mark Twain - no way did dry old Disraeli come up with that)

 

[The Atheist]

Which goes neatly back to your ◊◊◊◊◊◊◊ coffee!

 

[Roger Ramjets]

Eta: the short life span of the 50% tarrif really doesn't do much to explain the multi year trend, but it is at least something that could be pointed to as a wildly outscale cost multiplier

"Wildly outscale cost multiplier" is what you get in a commodity market when demand is inelastic. Why? Because buyers are willing to pay whatever it takes to get the supplies they need.

The 50% tariff wasn't expected to be 'short' when introduced. The futures market priced it in for a longer time, guaranteeing the price would stay high for years. This trend continued even after the tariff was reduced because you never know what Trump's going to do. The increased uncertainty alone causes the price to go up because the risk is higher. Combine that with other cost increases and you have 'structural' inflation.

Mo Eta: for all this talk about Vietnam's weather tripling prices, 97% of their exports are Robusta beans. The States import 97% Arabica beans, with hardly any Robusta in the market.

Err...

{Eta: watch how simple- Vietnam had a bit of weather for the last 6 years and the entire country is currently under 10 meters of water. Most people don't know that Vietnam supplies 75% of the world's coffee beans, so this created a massive global shortage, which made every other bean supplier producer say "well that had nothing to do with me, but imma jack my prices up now bitch, just because I can". By the way, there aint been no ◊◊◊◊◊◊◊ coffee shortage, with mother ◊◊◊◊◊◊◊ jonesing outside the shuttered up Starbucks. Demand is more thsn adequately being met}

Turns out that yes, Vietnam did 'have bit of weather'. It doesn't supply 75% of the world's coffee beans of course, but does supply 40% of the world's Robusta. If people can't get one type they may switch to another, putting pressure on that supply.

The whole market is interconnected, so when the price goes up in one place it will do the same in other places. You say "that had nothing to do with me, but imma jack my prices up now" when in reality the supplier could just be making up for a loss they suffered previously. This is common in farming, where an entire crop could be wiped out by bad weather and the farmer will want to make up for it the next year - which means they need a bumper crop and/or a huge price increase just to break even.

You say 'demand is being adequately met', but people in the industry say otherwize. I guess you think they are all lying as they collude to jack prices up for no reason.

 

[Thermal]

"Wildly outscale cost multiplier" is what you get in a commodity market when demand is inelastic. Why? Because buyers are willing to pay whatever it takes to get the supplies they need.

The 50% tariff wasn't expected to be 'short' when introduced. The futures market priced it in for a longer time, guaranteeing the price would stay high for years. This trend continued even after the tariff was reduced because you never know what Trump's going to do. The increased uncertainty alone causes the price to go up because the risk is higher. Combine that with other cost increases and you have 'structural' inflation.

Ok, this doesn't have anything to do with the topic at hand, but it's an interesting economic question anyway. Why would investors making a bad bet on futures keep the price high? That would mean they just lost money when the end of the contract ran out, but that doesn't actually affect the bean price. Betting on futures is a stock market gamble. if anything, the infusion of extra money to the struggling coffee suppliers (whose value at contract end was lower than the futures gamble) should ease their burden?

If, as you assert, making a bad bet on futures actually raises the market price of the commodity (in this case, coffee), no one would ever lose money on futures, and no company would ever go broke.

Err...

Turns out that yes, Vietnam did 'have bit of weather'. It doesn't supply 75% of the world's coffee beans of course, but does supply 40% of the world's Robusta. If people can't get one type they may switch to another, putting pressure on that supply.

And did they? Were the shelves as barren as this would imply? I have not heard a peep of this. And that's what I am talking about (not the coffee market): being told absurdities to justify price spiking, when those absurdities are neither seen nor jibe with prices as we see them.

Dirtywick posted recently that the coffee growers conglomerate dudes say that the end user is paying 50% more in the window we are discussing. I'm seeing 2-3x more. Are you not seeing this? Don't just repeat hypothetical and canned answers: are you actually paying what they assert you are paying?

The whole market is interconnected, so when the price goes up in one place it will do the same in other places.

It can. It can also just raise prices under the "what people will pay" theory. "There's a storm affecting crops over there somewhere, so that justifies me spiking the price. Market value, you see." I think of that as gouging. Its like if a carpenter or plumber triples their rates after a storm in their area. People may be 'willing' to pay it out of sheer desperation, but that does not make it less gougy, or ethical.

You say "that had nothing to do with me, but imma jack my prices up now" when in reality the supplier could just be making up for a loss they suffered previously. This is common in farming, where an entire crop could be wiped out by bad weather and the farmer will want to make up for it the next year - which means they need a bumper crop and/or a huge price increase just to break even.

Like our carpenter or plumber. "Yeah, I didn't work last couple years, so now imma charge triple".

But that's just being cynical on my part. Yes, the farmer needs to keep his head above water or he's out of business too. But these random hypothetical aren't addressing what we are discussing. We are at least trying to talk about the specifics of this jumping off point.

So Brasil, the biggest single Arabica coffee supplier on the planet, put out 10% less beans than the previous year, per data upthread. That would make the beans scarcer, and make the seller up his price. You further posit that other countries would cut in line to buy up the Arabica beans because they can't get Robusta. All of which, non-negotiably, would have to lead to empty shelves at the retail end. I mean, according to you, the demand far outweighs the available supply, and radically so. That would account for a hypothetically inflated price, due to the scarcity. So is it actually scarce? I'm not seeing it or hearing about it, year after year. I'm hearing a ton about how it totally is happening and justifying high prices, but at the consumer's observable end... no, the cupboards are overflowing. Where is this reported extreme scarcity shown, wild enough to triple end user costs, beyond the claims of those profiting from it?

You say 'demand is being adequately met', but people in the industry say otherwize.

Which is why I call bull ◊◊◊◊. And that ain't in a vacuum, ducky. We just went over how the "people in the industry" say the price for the end user is up 50% in the time frame, when your own ◊◊◊◊◊◊◊ posts prove that it is much much higher.

I guess you think they are all lying as they collude to jack prices up for no reason.

No reason? Are you not paying attention at all? What might a reason be to gouge prices during a time of inflation, lol?

 

[Thermal]

100%. It's not very relevant. Inflation isn't applied evenly, so anomalies exist. Big deal.

It's not about even distribution. The price of caviar don't mean jack ◊◊◊◊ to me either.

This is a little conspiratorial on my part, but why is what the experts tell us transparently bull ◊◊◊◊? Consider the example I've recently been shown: coffee is up 50% in the time frame I'm highlighting it, according to industry experts. Is this in-your-face bull ◊◊◊◊ or not, do you think? If you think it is, why are we buying the justifications offered by those same people? We know they are lying to our faces. Yet we have a couple posters here nodding and accepting it uncritically.

Lies, damned lies, and statistics. (definitely Mark Twain - no way did dry old Disraeli come up with that)

Sounds like Twain's wry humor, but I'm not at all familiar with Disraeli's writings. Never heard of him, except as Twain saying he lifted the line from Disraeli.

 

[Resume]

I'm buying Kraft/Heinz stock in anticipation of the Fed raising rates.

Splat!

 

[Roger Ramjets]

Yes, the farmer needs to keep his head above water or he's out of business too. But these random hypothetical aren't addressing what we are discussing. We are at least trying to talk about the specifics of this jumping off point.

This isn't a random hypothetical. Farmers need to get enough to cover all their costs. If they produce less product and don't have lower expenses the cost per bag has to go up, or they go bankrupt. The natural result of reduced supply is a higher market price, which acts to stabilize the situation. Farmers get more per bag which compensates for the lower yield. If the market can't bear that price and farmers have to sell at a loss, the industry fails.

Vietnam's production slumped dramatically during the extreme weather they had. If you are wondering what effect this should have on the price, just look at the price. Considering what took place in Vietnam, the observed price increase is reasonable.

So Brasil, the biggest single Arabica coffee supplier on the planet, put out 10% less beans than the previous year, per data upthread. That would make the beans scarcer, and make the seller up his price. You further posit that other countries would cut in line to buy up the Arabica beans because they can't get Robusta. All of which, non-negotiably, would have to lead to empty shelves at the retail end. I mean, according to you, the demand far outweighs the available supply, and radically so.

No, I didn't say that. What I said was that a small supply shortage could result in a large price increase. This is the part you don't seem to understand, but it's simple math. Demand doesn't drop off until the price rises to a level that people won't pay. The fact that coffee demand is still rising shows that the price hasn't reached the point of demand destruction.

Which is why I call bull ◊◊◊◊. And that ain't in a vacuum, ducky. We just went over how the "people in the industry" say the price for the end user is up 50% in the time frame, when your own ◊◊◊◊◊◊◊ posts prove that it is much much higher.

Not the same thing. You're comparing a finished product to the raw material, and/or wholesale vs retail. Retailers often absorb material price increases on the basis that they will go down again soon. If the price doesn't go down then eventually they have to raise the retail price, and when they do it will be higher to cover the loss.

The other method is to simply apply a fixed markup to the wholesale price, which leads to greater variation but a more 'accurate' retail price - and accusations of price gouging. But nobody complains when the price goes down and is really cheap.

How much retailers 'buffer' price variations depends on the product and customer expectations. I bought a punnet of tomatoes today for $2.59. The last one cost $6.00. That's considered normal for this seasonal product whose cost of production varies greatly depending on the weather.

 

[Roger Ramjets]

No reason? Are you not paying attention at all? What might a reason be to gouge prices during a time of inflation, lol?

The reason to 'gouge' prices during a time of inflation is the same reason as when it isn't - maximizing profits. However in a competitive market someone will undercut you and steal your sales. To prevent this you need to collude with them. Your challenge is to show evidence for this collusion (and no, the price alone is not evidence).

 

[The Atheist]

This is a little conspiratorial on my part, but why is what the experts tell us transparently bull ◊◊◊◊?

It's not entirely BS. The problem is that inflation needs to be measured so that bond and coupon rates can be set. If inflation is running at 4%, people want 5% on deposits, so a weighted basket gets used to give conformity.

Blunt tool, but it's the only tool we have.

Sounds like Twain's wry humor, but I'm not at all familiar with Disraeli's writings. Never heard of him, except as Twain saying he lifted the line from Disraeli.

Odd that he attributed it to him - maybe he thought crediting Disraeli would give it gravitas.

 

[Thermal]

This isn't a random hypothetical.

Yes, it is. I'm trying to talk about the specifics of an outscale multi year consistent increase completely eclipsing inflation rates, and you are responding with vague generalities about basic supply chain price fluctuations.

Vietnam's production slumped dramatically during the extreme weather they had. If you are wondering what effect this should have on the price, just look at the price.

Let's do that, shall we? The extreme Vietnamese weather conditions your position relies on took place in 2025, literally at the tail end of the time frame we are discussing. The prices were already sky high at the beginning of the Vietnamese series of unfortunate events, and the spike that you say it's correlated to was relatively mild and consistent with the major disruption they suffered.

None of that accounts for the massive increase preceeding it in our time frame, spanning years. The extreme weather events you repeatedly rely on during the majority of the price skyrocketing simply weren't happening. Your reliance on the 2025 Vietnam weather is a red herring.

Considering what took place in Vietnam, the observed price increase is reasonable.

Then I'll point it out to you again: thr price was already at more than doubled before the weather events you rely on, and the market conditions that dominoed afterwards. The observed continued rise was normal; the majority of the previous outscale rise is left unexplained.

No, I didn't say that. What I said was that a small supply shortage could result in a large price increase. This is the part you don't seem to understand, but it's simple math. Demand doesn't drop off until the price rises to a level that people won't pay. The fact that coffee demand is still rising shows that the price hasn't reached the point of demand destruction.

Another red herring. We are not talking about whether people have had enough yet, and critical mass reached. Repeating ◊◊◊◊ you are more comfortable discussing is not addressing the issues I'm bringing up. You know, the ones you keep taking the extra time to snip out?

Not the same thing. You're comparing a finished product to the raw material, and/or wholesale vs retail.

Oh Jesus christ, no I am not. I said, in very plain English, that... wait, let me put it in big letters so you can't feign misunderstanding again:

INDUSTRY EXPERTS CLAIM A 50% RETAIL INCREASE AT THE END USER LEVEL IN THE EXACT WINDOW I AM REFERENCING. OBSERVING CURRENT RETAIL PRICES DEMONSTRATES THAT THAT IS LUDICROUSLY UNDERSTATED.

Jesus ◊◊◊◊◊◊◊ Christ, did you understand it that time? I only added that your own wholesale data was right in line with the retail pricing, and both far above the industry experts' claim.

Retailers often absorb material price increases on the basis that they will go down again soon.

Which, as we keep pointing out, they are not doing. They are passing down increases at a remarkably outscale rate, while the shelves and cafes are swimming in excess coffee.

But nobody complains when the price goes down and is really cheap.

Lol, you're going farther off into fantasy land. The price ain't coming down, Jackson, and hasn't been for years. The price graphing looks like one of those 'limit approaching zero' representations, and forecasts are expecting yet further outscale increases.

How much retailers 'buffer' price variations depends on the product and customer expectations. I bought a punnet of tomatoes today for $2.59. The last one cost $6.00. That's considered normal for this seasonal product whose cost of production varies greatly depending on the weather.

Yet another red herring. We all know seasonal.product prices fluctuate for out of season produce, usually because of the hemisphere-crossing additional shipping costs. Coffee is grown in the same temperate zone, so those costs are consistent.

I mean seriously dude- if you can't explain this either, that's fine. But random ◊◊◊◊ that does not correlate to what we are talking about doesn't address the issues I'm raising. Vietnam's 2025 crop shortages are only impacting shelf availability this year. Throughout 2025, the price was already through the roof, before the first storm hit them. The spike you rely on was not the cause of the window I am.talking about. Al the known factors combined do not explain it.

And that's not even what the issue is- my issue, from the beginning, was industry experts doing exactly what you are doing- making absurd justifications and playing fast and loose with timelines and causes.

 

[Thermal]

The reason to 'gouge' prices during a time of inflation is the same reason as when it isn't - maximizing profits.

Then why did you pose that i thought they would be doing it "for no reason"?

However in a competitive market someone will undercut you and steal your sales.

With appaling obviousness, not happening here. The coffee market (broadly, and IMO) has shifted from being a competitively priced staple to "cost be damned, we sell the coolest brew". Luxury stuff, like the rates of doctors and lawyers, is not about undercutting each other in the scramble to the bottom.

To prevent this you need to collude with them. Your challenge is to show evidence for this collusion (and no, the price alone is not evidence).

Do lawyers collude to keep their rates high? And please don't bother with "well their rates are high because law school is expensive" or whatever hypothetical platitude you can cook up. Their rates are high because people are basically forced to pay them. They do not need to "collude" when no one is undercutting them. Who is competing with Coffee producers? Bovril and their beef tea?

Eta: here's a simple argument you could use to challenge my observation on the coffee spiking:

"So, Thermal... you were paying 6 bucks for two pounds of gourmet coffee in 2020 and some time before that? Wow, that was a remarkably low price even then. Had you tracked how long that particular store brand was already on the market at that price point? Had it occurred to you that you might have first started buying it when it was a new product line, and the retailer was running it at a loss leader type of promotion to build their consumer base (a large grocery chain could handle this), then brought the price up to where it should have been in the first place, coupled with the rising industry costs and COVID inflation?"

That would be a valid argument to pull me back from more than tripling being the baseline (and might well be true). But my interest is what seems to be a government, industry, and media misrepresentation of how inflation is impacting the end user. The coffee industry experts (returning to our case study here) are grossly downplaying the increases. I see this all over, particularly in my own industry (which is not as commonly familiar as coffee, so I'm not bothering with that).

 

[dirtywick]

lol somebody didn’t have their morning coffee

 

[Thermal]

Welll I can't get my Kona anymore because *checks notes* the whole ◊◊◊◊◊◊◊ planet having bare coffee shelves apparently caused a run on it. So I'm told.

 

[Thermal]

Also, with all this talk about Kona taking up the slack for a global shortage, I learned a fun fact: the Hawiians are able to kick out about a tenth annually of what is packaged and sold as Kona beans. The other 90% of what's on the shelves is fake. The odds are pretty good that most of us never actually tasted any (I actually had quite a bit in Hawaii, and to my poor palate, it tasted about the same as what we buy on the mainland, so it must be relatively easy to clone with Arabica beans or whatever.

 

[theprestige]

It's just Arabica grown in Kona, Hawaii.

As someone who already finds talk of terroir insufferable from wine snobs, I fully support the Wal-Marts of the world doing their best to adulterate the Kona coffee brand through whatever loopholes they can find.

 

[dirtywick]

Welll I can't get my Kona anymore because *checks notes* the whole ◊◊◊◊◊◊◊ planet having bare coffee shelves apparently caused a run on it. So I'm told.

come on, you didn’t take any notes

 

[Thermal]

It's just Arabica grown in Kona, Hawaii.

Supposedly unique due to the volcanic soil and unique weather patterns of sunny mornings and cloudy afternoons. There's also something attractive to me about domestically produced goods of any kind.

As someone who already finds talk of terroir insufferable from wine snobs, I fully support the Wal-Marts of the world doing their best to adulterate the Kona coffee brand through whatever loopholes they can find.

The wine thing is real, as I understand it, but most people claiming to have a somalliers' appreciation are just posing. They can't tell a fine vintage from Mad Dog 20/20.

I don't much care if a bean was grown on a volcano's slopes- but if you tell me it's a domestic product and it 90% ain't, that's not clean pool.

 

[Thermal]

come on, you didn’t take any notes

Sure I did. Nutty notes, chocolatey, Cliff, love, B flat. All kinds of notes.