Wednesday, August 15, 2007
Higher prices for food and lower home sales
The big news of the day for people who don't go to the supermarket is the rising cost of food. This is being driven by energy prices.
The Labor Department’s most recent inflation data showed that U.S. food prices rose by 4.1 percent for the 12 months ending in June, but a deeper look at the numbers reveals that the price of milk, eggs and other essentials in the American diet are actually rising by double digits.
Inna and I only buy our eggs from a small grocery store which has better quality and lower prices for eggs and produce than Jewel. We consume at least five eggs a day so it is a big part of our diet.
Adding to the good news is that home sales were down in 41 states. Prices also fell modestly but did rise in some areas. I believe this is because of the difficulty in the subprime mortgage market.
Until only a few weeks ago, just about anyone could walk into the bank and get a mortgage. The young, the old, the jobless and heck, there were stories of dead people getting mortgages.
Anything was possible. Until now.
There are stories coming out from all over the country of homebuyers now unable to get loans. Virtually overnight access to credit has simply gone away.
It is harder to get a mortgage so only the better credit risks who usually have more income can afford to buy. And they are buying more expensive homes which drives up the average sale price, IMHO.