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American Priorities

Despite the fact that most talking heads on TV will ignore it, inflation is becoming a problem for the American consumer. Although the prices of "core goods" might only be up nominally, the prices of other important goods, like food and energy, are increasing at double digit pace. The Economist recently pointed this out on its cover.

According to CNNMoney, milk prices alone are up 23% this year. So what would you expect a reasonable consumer to cut back on? Discretionary goods? Gasoline? They would never cut back on staples, like milk, right? The CNNMoney article goes on to give a slightly disturbing anecdote:

John Norris' family is drinking a lot less milk these days. He said he considers the higher prices and has cut back on his kids' milk consumption. But between work and family obligations, he still drives almost as much as he used to. "That's the reason I cut down on milk consumption - so I can drive my car," said Norris. And Norris should know. He's the director of wealth management for Oakworth Capital Bank and a food price expert.

The Norrises aren't the only family getting pinched at the grocery store. Prices of food and non-alcoholic beverages rose 4.7 percent since the beginning of the year through November, outpacing the 4.3 percent increase in the overall cost-of-living, according to the federal government's Consumer Price Index. Everyday foods like fruits and vegetables, beef, poultry and cereals are on the rise. The price of milk is the biggest culprit, with a staggering increase of 23.2 percent through November. And with basic foods like dairy and wheat driving up the cost of other groceries, almost everyone is feeling the squeeze.

Unfortunately, I wouldn't be surprised to find that many families are cutting back on consumption of goods like milk and other wholesome foods in order to maintain their perfect suburban lifestyles. And some wonder why America has such an obesity problem...

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