The press loves itself a good story about rising prices, particularly if it’s about the cost of food going up.
We see this just about every year with the flurry of stories based on an annual farm bureau press release that tallies up the cost of Thanksgiving dinner. When it’s up big, it’s evidence of impending hyperinflation to The Wall Street Journal editorial page. When it’s up slightly or down, it still gets hyped and twisted.
Now we’ve got the Fourth of July to keep an eye on, and the media is very worried that the cost of the classic 4th of July cookout has gone way up.
Bloomberg compiles the Bloomberg Barbecue Index, which it says shows the cost of a July 4th grill gala at a record. Ground beef prices are up 10 percent from a year ago, while hot dogs are up 5 percent, it says. “Veggies—this one really hurts—up half a percent. The reason why is ‘cause I love corn and butter, which I slather on my corn,” says Alix Steel.
Fortune has its own BBQ index, which it says shows the cost of an Independence Day cookout “skyrocketing” 28 percent in the last decade. An amateurish video accompanying the post extends the metaphor by deeming them “exploding prices.”
Problem is, all of these stories are at best incomplete and at worst misleading. Food prices are volatile, and cherry-picking a handful of food products as a symbol for the overall change in food costs is more likely to fool readers than to tell them what’s really happening.
And that’s true here. While the BBQ indices say the Fourth feast costs are up more than 5 percent this year, Bureau of Labor Statistics data show that overall food prices are up just 2.1 percent. The cost of a 4th of July cookout, up 28 percent over the last decade, is actually up a bit less than overall food prices, which have risen 30 percent.
But the bigger problem with all these reports is that they present these cherry-picked costs in isolation from the rest of the economy. It’s true that the price of hamburgers and chips went up 28 percent in a decade, but that’s in line with overall price increases, which are up 26 percent. In real terms, in other words, the Fourth of July price increases are basically a wash.
Meantime, median household income rose 20 percent over the same time and GDP per capita was up 34 percent. To put it another way, food costs have risen faster than paychecks for the average American over the last decade, but that’s primarily because the distribution of gross domestic product has continued to skew in favor of the very highest earners.
And anyway, these are not big jumps in the price of food over 10 years. From 1994 to 2004, food prices rose 28 percent, for instance. From 1984 to 1994, they rose 41 percent, and the decade before that they jumped 90 percent.
But it’s true prices have increased a bit more rapidly in the last year. The main contributor to that is the rise in the cost of beef. Cattle stocks have declined sharply since the late 1970s as Americans eat less beef. But supply and demand are out of whack now because of the devastating drought that’s hit cattle-heavy areas like Texas and Oklahoma and feed-growing areas in the Midwest. It will take a couple years for that to balance out. You won’t read about that in any of these stories, though.
Some of the weak coverage is simple angle inflation: Reporters get better play for their stories if they can play up some record price. Some of it is innumeracy: Fortune, for instance, calculates that its homemade quarter-pound burgers would cost $3.02 each, when they would cost half as much.
The American Farm Bureau Federation, the same group that puts out the Thanksgiving release, has its own 4th of July index, and it reports that the cost will run to about $5.87 a person for a feast that includes fully dressed cheeseburgers, hot dogs, pork ribs, chips, baked beans, potato salad, watermelon, lemonade, and chocolate milk.
“Feast costs less than 6 bucks a head” doesn’t grab readers like “Fourth of July barbecue costs sizzle after food prices rocket does, apparently.