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Inflation May Hit Splurge Items More Than Staples

Prices on guilty pleasures are likely to go up before your bare necessities.

Inflation is steadily rising. That much we know. But experts say the steepest hikes will be for the stuff you want, but don’t need. Staples such as milk, bread and butter – the consumer-sensitive “open-you-wallet” items that send you shopping even on a rainy day are unlikely to budge as much. It’s the non-essentials like blue cheese and parma ham at the deli counter you need to watch out for.

The cost of living rose in September for the third consecutive month, according to Labor Department data, increasing 3.9% in September, the highest level in three years and above the Fed’s comfort zone of close to 2%, The Wall Street Journal reports. On Tuesday, producer prices – the amount farmers receive for their goods from manufacturers – rose by 6.9% compared to September 2010.

Your grocery basket will still get pricier, experts say. “Staples such as milk, eggs and butter will see only modest increases given they are traffic drivers for most retailers,” says Sherif Mityas, a partner in the retail practice at AT Kearney, “while more convenience or impulse items such as ice cream, deli meats will show much higher price movement.”

That also means snacks: corn chips and other guilty pleasures, says personal finance and investment blogger Andy Nyquist. “One area where they may look to pass price increases is snacks, especially in higher-end grocers and even supermarkets that market their healthier goods,” he says. “Corn prices have moved higher over the past year and those input costs are now hitting many snacks and cereals we know and love.”

Aside from rises in gum and candy, shopping bags will continue to get lighter, too. Nyquist calls it, “Honey, they shrunk my grocery bag.” Bags of chips and crackers and cereals are getting smaller, he says. “They are simply reducing their costs to keep prices attractive for consumers hit hard by economic hardship and uncertainty,” he says. “This will continue as food and energy costs are pushing the CPI higher.”

Others see more broad-based hikes even sooner than the six to nine months expected by some analysts. “We’re going to see dramatic increases even through the holiday time,” says Phil Lempert, CEO of grocery information site SupermarketGuru.com. But he says still watch out for deals on free Thanksgiving turkeys – as long as you spend a fist-full of dollars. “Where you do your Thanksgiving shopping is where you are most likely to shop for the holiday season,” he says.


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    • “Our country is degnsied for politics to have a much larger role than is probably good for us as individuals.”i could not disagree with this more vehemently.our country was degnsied to give the rights of the individual primacy and keep politics to a minimum. it was degnsied with a TINY federal government with very limited powers that were explicitly delineated.read the constitution. it is VERY clear on that point.and that’s how it worked for 150 years.in the 20′s the federal budget was still <2% of gdp.then, between the double whammy of hoover and particularly fdr (a true fascist and fan of mussolini) we moved to big, interventionist, redistributionist government.this was not design, it was contrary to design and a massive, unconstitutional usurpation of power. but, it was a "crisis" so everyone went along and ignored that fact.this is why crises are so dangerous. we throw our principles under the bus when some politician claims "pragmatism" or "dire need" and takes our rights "for the common good". it's precisely what we have seen in this last crisis as well.the estimates for the "do nothing" side came from UAW sponsored entities and politicians barracking for their own benefit.i have not seen any that looked realistic. what would have happened?plants would have closed, sure, but they did that anyway. gm closed what, 1/3 of its plants?car sales plummeted anyway.using chap 11 and DIP financing would have minimized disruption. it also would have left the new entities with access to capital markets later. you think anyone is going to loan money to a UAW run enterprise after what happened to the last set of senior secured creditors (especially at C) without charging a hideous premium?this was an excellent change to rework a hidebound and industry that has serially failed. it's not like this was the first bailout. it won't be the last either. we'll see GM with its hand out again in 15 years. i'm not even clear why C should exist at all.this is just another case of propping up failed businesses for political reasons. unlike past efforts, they did it not just at taxpayer expense (which in and of itself is not supported anywhere in the constitution) but by violating settled BK law and practice and taking money from creditors to pay the UAW.this focused taking is the literal equivalent of a mugging. that is the act of a fascist state, not one based on rights and liberty. you'd expect it from chavez, not the POTUS.this, in many ways, is the worst effect of the whole thing. such outrages are always easier to commit the second time as you can point to the first and claim precedent.that's how we wound up with a federal government exercising so much extra constitutional power in the first place.

    • that, if i were to be a part of some big miracle, and i were to get to drceit the big stuff, i have always told myself to try and help everyone i can along the way. people talk about how britney spears or hillary duff are role models for teenage girls and they should be careful about how they act the same (in a twisted way) goes for the fans of drceitors like QT. studying his films, his style, his choice of actors, music etc. is great. but seeing interviews and news about their real lives and how they interact with other human beings is a confirmation that there will always be douchebags in the world.long post, i know, but i guess i have come to the same realization that you have. i will always love the man’s movies, and i will be first in line if he ever decides to make another, but it’s sad knowing that a man whose work i admire so much, is a man who i would never want to be like.

    • “The cost of living rose in September for the third consecutive month, according to Labor Department data, increasing 3.9% in September,”

      This is incorrect. The cost of living rose 0.3% in September. 3.9% is how much the cost of living has increased since last year.

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  • Pay Dirt examines the millions of consumer decisions Americans make every day: What to buy, how much to pay, whether to rave or complain. Lead written by Quentin Fottrell, the blog examines these interactions, providing readers with news, insight and tips on shopping, spending, customer service, and companies that do right – and wrong – by their customers. Send items, questions and comments to quentin.fottrell@dowjones.com or tweet @SMPayDirt.