Will Americans Feast on Inflation This Thanksgiving?
Over the past several years, the Federal Reserve has been on a mission to stave off deflation and stabilize the economy. Through quantitative easing and record low interest rates, the central bank is serving the financial system record amounts of liquidity with hopes of driving asset prices higher. While Americans have witnessed increased prices in many areas of their lives, inflation appears to be absent at this year’s Thanksgiving dinner table.
The average cost of a 10-person Thanksgiving feast is cheaper on a year-over-year basis for the first time since 2009. According to the American Farm Bureau Federation’s 28th annual price survey, Thanksgiving dinner will cost $49.04 this year, down from $49.48 in 2012 and $49.20 in 2011.
“This year we can be thankful that Thanksgiving Dinner, a special meal many of us look forward to all year, will not take a bigger bite out of our wallets,” said John Anderson, AFBF’s deputy chief economist. “Most Americans will pay about the same as last year at the grocery store for a turkey and all the trimmings. Slightly higher turkey production for much of the year coupled with an increase in birds in cold storage may be responsible for the moderate price decrease our shoppers reported.”
The shopping list includes everything from turkey and sweet potatoes to cranberries and a relish tray of carrots and celery. Pumpkin pie with whipped cream and beverages of coffee and milk are also included. The AFBF had volunteer shoppers check prices in grocery stores in 34 states.
A 16-pound turkey was the most expensive item on the menu at $21.76, down about 47 cents from a year earlier. In fact, the turkey showed the largest price decrease when compared to last year. Rolls, fresh cranberries, green peas, and bread stuffing also declined in price. Meanwhile, sweet potatoes, whole milk, coffee, and a can of pumpkin pie mix experienced price increases.
“Special sales and promotions on turkey and other holiday food items will continue right up to Thanksgiving,” Anderson said. “If you have the patience to wait until the last minute to buy a turkey you might come home with an exceptional bargain.”
Other inflation gauges have also showed little movement this year. The U.S. Bureau of Labor Statistics’s seasonally adjusted Consumer Price Index for All Urban Consumers increased by only 0.2 percent in September. Over the past 12 months, the agency claims consumer prices are up only 1.2 percent.
Investors have kept inflation data in their periphery recently because of the Federal Reserve’s aggressive monetary stance. The central bank maintains that inflation and the headline unemployment rate are important thresholds for its zero interest rate policy. The Federal Reserve’s preferred method of measuring inflation is by personal consumption expenditures. The PCE index, managed by the U.S. Bureau of Economic Analysis, has been trending well below the central bank’s 2 percent target this year.
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