I took my 20-year-old daughter to dinner Thursday last week. I ordered the same $45 T-bone steak I’d ordered just the week before at a lunch, and again at a client lunch in December. It was amazing.
When the bill came it was $65. I queried the figure as I recalled seeing $45 on the menu as I ordered (I don’t forget numbers). They told me it was the correct price. Much to my daughter’s embarrassment, I asked to see the menu with that price on it. Sure enough, a nice shiny new menu said $65. It didn’t match the image I had in my head.
My daughter was starting to hide under the table at this point, but it was a matter of principal now. I asked them to check if I’d been given a different menu as I recalled specifically seeing $45 as the price. The restaurant manager came over shortly after and explained they have recently printed new menus and I had been given an old one.
There was no mention of price increases of 10%-50% across the board. Simply that they had printed new menus. I realised the menu was the same though. The only difference was the prices.
My 18-year-old son works part time at a fine dining Italian restaurant. I asked him if his work has put their prices up recently. He said he didn’t think so. I told him the story of the new menus. He said yes, his restaurant is printing new menus too.
I see. Restaurants and cafes don’t put their prices up, they just print new menus. Clever.
It’s a simple story that adds to the growing list of anecdotal evidence we are starting to see all around us. The canary in the coal mine for what’s to come for inflation and everyday consumers.
Prices are going up significantly.
Every business is seeing it. Talk to any builder and you’ll find they have had to move to ‘cost plus’ building contracts because fixed price contracts are killing their business as the price of building materials and contractors has skyrocketed.
Inflation is everywhere at the moment and while it was previously a supply chain issue, brought on by covid, that is starting to change fast. Wages growth is accelerating hard and fast. Talk to any recruitment firm and they will tell you salaries for a $70,000 role are now $100,000. Companies just need workers.
This was all before the Russian invasion of Ukraine.
Now, in addition to all the inflationary pressure mounting globally, we have a huge spike in the price of oil and gas as well as all types of commodities from iron ore to wheat. This is a serious problem for inflation and the global economy.
Later this week, we have CPI data from the US which is likely to show sustained high inflation. This will be followed shortly after by the European Central Bank announcement on rates. The ECB are in the impossible situation of trying to navigate their economy through what appears to be emerging stagflation situation of high inflation and low growth. Interest rates across the world are rising.
Meanwhile, here in Australia, the signs of inflation are all around us and the RBA continues to ignore the reality and fails to act. RBA boss Philip Lowe is doing his best impersonation of the dog with the coffee in the burning house ‘Its fine’ meme. If you’re not familiar with it just google ‘Its fine meme’. This is where we are at.
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