Latest Inflation Numbers and Discussion

[JoeWras]

What am I missing?

Avocados. DW and I have just gotten into them. Maybe at a bad time.

 

[Trailwalker]

I was in the oil and gas business for 30+ years and understood that we do import crude from Mexico to primarily refine it at the Houston Ship Channel refineries and send it back as gasoline due to their poorly maintained refineries. They also are short on refining capacity overall. I doubt this practice will impact U.S. gasoline prices.

BTW, we are entering the summer driving season where summer gasoline is currently being refined to meet increased demand later this year. Those summer formulations are more costly in some areas due to Clean Air Act requirements, so pricing will go up to accommodate the increased refining costs.

We (the U.S.) is currently the largest crude oil producer in the world and we export some crude, gasoline, diesel and lubricants products worldwide. We also export a huge amount of LNG through several Gulf and East Coast terminals.

Crude oil, nat gas, gasoline, other refined products are commodities and worldwide demand and supply numbers dictate pricing.

You are the expert, so I defer. What I've been reading is that U.S. refineries, particularly in the Midwest, rely upon Canadian oil (which is heavier?) and can't easily substitute other types of oil.

Here are some goods in the crosshairs of Trump's tariffs on Mexico, Canada and China

President Donald Trump signed an order to put tariffs on U.S. neighbors Canada and Mexico, as well as China, starting Tuesday.

apnews.com

 

[audreyh1]

Avocados. DW and I have just gotten into them. Maybe at a bad time.

Avocados are quite a bit more expensive at Costco now. $9.99 for their jumbo six pack this week as opposed to $6.99, or $5.99 earlier for many years.

 

[jim584672]

Have you all learned nothing from 2020? Toilet paper panic soon, load up the truck.

 

[GenXguy]

Have you all learned nothing from 2020? Toilet paper panic soon, load up the truck.

Funny. I had actually purchased a big stack of TP before the last TP panic - just a coincidence. It lasted well beyond the shortages. And just recently, I bought another stack, so I guess I'm ready for it. lol

 

[Taco]

What I've been reading is that U.S. refineries, particularly in the Midwest, rely upon Canadian oil (which is heavier?) and can't easily substitute other types of oil.

That is my understanding also, but it is worth noting that the majority of US refineries do not rely on Canadian oil. For all the oil refined in the US, probably around 20% of that comes from Canada.

 

[Chuckanut]

No doubt. 25% inflation in some instances. I consider it the inflation tax.

I only have so much money to spend. If I have to pay 25% more for a true necessity, that is money I won’t have to buy a luxury or otherwise not needed product .

Not defending tariffs, just saying that there is only so much juice in the orange no matter how hard you squeeze.

 

[aja8888]

You are the expert, so I defer. What I've been reading is that U.S. refineries, particularly in the Midwest, rely upon Canadian oil (which is heavier?) and can't easily substitute other types of oil.

Here are some goods in the crosshairs of Trump's tariffs on Mexico, Canada and China

President Donald Trump signed an order to put tariffs on U.S. neighbors Canada and Mexico, as well as China, starting Tuesday.

apnews.com

Yes, that crude oil comes down through the Enbridge pipeline system around Superior, WI. Some of it goes to the Cushing terminal in Wyoming for other distribution. Cushing is owned by Enbridge, too. Enbridge is the largest pipeline company in North America and supplies many Midwest and East locations.

 

[target2019]

Have you all learned nothing from 2020? Toilet paper panic soon, load up the truck.

Kleenex sold out at BJs. A lot of crying is expected.

 

[GenXguy]

I did a quick search and saw articles from December about Americans stockpiling toilet paper and other items in fear of tariffs.

 

[aja8888]

I did a quick search and saw articles from December about Americans stockpiling toilet paper and other items in fear of tariffs.

Just buy U.S. made products!

 

[Gumby]

Just buy U.S. made products!

Toilet paper, while mostly produced in factories in the US for domestic consumption, is made from wood pulp, much of which is imported from Canada.

 

[2HOTinPHX]

Just buy U.S. made products!

90% of toilet paper used in the U.S. is produced within the US. The remaining 10% is imported, mostly from Canada and Mexico.

 

[aja8888]

^^^^^ Install a bidet to conserve on TP! Bidet made in China! Oh oh!

 

[Gumby]

^^^^^ Install a bidet to conserve on TP! Bidet made in China! Oh oh!

When I was in Japan this past Fall, I noted that they had bidet functions in every toilet, which I found to be decadent frippery.

 

[USGrant1962]

I read that the Fed is not worried about tariffs because they constitute a fixed one time change in pricing at most, not an ongoing increase in pricing. So potentially I'm inflationary bur but on an ongoing basis.

May or may not be true but upon analysis that seems right.

...

There's that, and the fact that only about 10% of consumer spending is imports. The new tariffs are a negotiating tactic, and even if they stick around it will be a one-time inflation pop of maybe 1-2%. It's just a tax increase, essentially a sales tax. It is not going to relaunch inflation, inflation is a monetary phenomenon.

If you scroll down here you will see that housing, transportation, food, personal insurance and pensions, and healthcare are ~83% of what the average American spends. Of those categories only a small fraction of everyday expenses are imported from the countries involved (e.g., luxury foods like avocados and tequila). Some of the stuff hit by the tariffs is highly visible, but tiny in the overall scheme of consumer spending.

Consumer Expenditures in 2021

www.bls.gov

 

[Koolau]

No doubt. 25% inflation in some instances. I consider it the inflation tax.

I have no idea the final effect, but clearly, not everything you buy or pay for will be affected. I'd be surprised if it made even a 3% total effect but it would very much depend on your location and your mix of purchases. In many cases, you will also have a choice. You might decide that California avocados are okay instead of Mexican avocados and so forth.

Most of us have learned how to adjust to large price increases. I don't think that a tariff will make us forget how we got here (to FIRE) but YMMV.

 

[Koolau]

Seems like pretty simple math to me. Why don't so many seem to grasp that concept?

Math is simple - spending habits are not.

 

[audreyh1]

I think the current high avocado prices are due to poor yield last year. CA as well as Mexico.

 

[Murf2]

Most of the posters seem to believe only retail prices on affected goods will rise. I believe many retailers will see this as an option to increase prices on goods in general.

 

[Aerides]

When I was in Japan this past Fall, I noted that they had bidet functions in every toilet, which I found to be decadent frippery.

But...were you there during the time when they set the heat on? Warm toilet seats are amazing.

Either way, I'll take the decadence over their very old traditional "non-western" toilets, which are basically a slit on the floor.

 

[skipro33]

Most of the posters seem to believe only retail prices on affected goods will rise. I believe many retailers will see this as an option to increase prices on goods in general.

I agree and I think retailers are greedy and will not only pass along any price hikes on tariff items, but everything. I also think they will even if those tariffs are off set by price drops from the countries themselves.
Which could be a good thing for this administration as it would cause those countries to lose economy and meet those US demands required to drop the tariffs altogether.
Things are certainly going to get interesting going into summer this year! I'm glad I have a robust veggie garden as well as my egg and meat chickens. Heck, I might get involved with a little price gouging of my own.

 

[Koolau]

I agree and I think retailers are greedy and will not only pass along any price hikes on tariff items, but everything. I also think they will even if those tariffs are off set by price drops from the countries themselves.
Which could be a good thing for this administration as it would cause those countries to lose economy and meet those US demands required to drop the tariffs altogether.
Things are certainly going to get interesting going into summer this year! I'm glad I have a robust veggie garden as well as my egg and meat chickens. Heck, I might get involved with a little price gouging of my own.

This is just a game. High stakes, yes. But just a game. We'll see who blinks first, I suppose. Buckle up, it may be a bumpy ride.

 

[ShokWaveRider]

This is just a game. High stakes, yes. But just a game. We'll see who blinks first, I suppose. Buckle up, it may be a bumpy ride.

But not good for the country as a whole and as usual the financially challenged (Did you see that ) will be hurt. Remember the COVID price hikes, did we ever see prices come back? Some things stayed high, look how Fast food increased and did not come down. That is just an example as we do not eat that rubbish.

Not to mention the "American Hate" that is propagating around the world. Time to use a different passport.

 

[Flieger]

Avocados are quite a bit more expensive at Costco now. $9.99 for their jumbo six pack this week as opposed to $6.99, or $5.99 earlier for many years.

So they raised prices even before the tariff's went in to affect... This seems to be the norm.

Flieger