Finance

Inflation is receding, but prices are getting higher

While inflation finally winding down, price growth is still not back to levels that satisfy the Fed. And shoppers are (literally) paying for it. Prices grew faster than economists expected last month, according to the consumer price index data the government released last week.

The consumer price index is a measure of the prices shoppers see for goods and services across the economy, and its shown something unexpected:

• Prices climbed 0.3% in January (a little more than December) and 3.1% from a year ago.

• Excluding food and energy prices, January’s inflation was 0.4%, slightly over December’s reading, and 3.9% more than the prior January.

While it’s good inflation is trending downward, a lower inflation rate doesn’t necessarily mean prices are dropping… only that they’re rising more slowly. Meaning most of us are still feeling the effect of higher prices for most of the stuff we buy.

Grab your comfort food… or not

While used cars and clothes became cheaper last month, a spike in housing costs was the instigator for much of last month’s consumer price growth. Food is also getting more expensive:

• Grocery prices rose more than in previous months, and eating out became 5.1% pricier than a year ago.

Food inflation has since been noticed in more covert forms. Some brands are using a more scummy scheme, called “shrinkflation”, which is keeping sticker prices the same while reducing the portion size contained within a package.

Bitcoin broke $1 trillion in market cap… again

Here come all the crypto-heads talking about the moon. Originally promoted as an alternative to the traditional financial system, the total value of the world’s most popular cryptocurrency surpassed $1 trillion last Thursday for the first time since 2021.

This comes as the overall crypto market broke $2 trillion in market cap, largely pushed by investor confidence. If crypto were a publicly traded company, it would be the fourth-largest in the world behind Microsoft, Apple, and Saudi Aramco.

• On its own, Bitcoin would be the eighth-largest, split between Meta and Berkshire-Hathaway.

Why is investor confidence so high?

Spot bitcoin ETFs have a lot to do with it. Since the SEC approved them last month, crypto funds have received nearly $10 billion in deposits, according to CryptoQuant. But that’s not the only reason investors are so psyched… it’s almost time for halving.

Halving is a feature within bitcoin that reduces the rate of new coins entering circulation by 50% to further restrict supply. Bitcoin is a finite resource, so cutting supply, in theory, should hike up prices. The event occurs about every four years, and in the past has led to astonishing spikes in prices. In 2020, halving resulted in a 700% gain for investors.

Demand for luxury cars is skyrocketing

As the number of high net worth individuals is expected to rise in the coming years, luxury car brands are eager to accommodate. About 400,000 people in the world have approximately $30 million in potential spending, a group that’s expected to grow to almost half a million by 2028, according to CNN.

Carmakers have been busy manufacturing ultra-customizable opulent vehicles to entice the growing market of high rollers:

• Ferrari’s revenue rose 17% to $6.46 billion in 2023, and the company’s stock hit a 52-week high on Feb. 1st.

• Lamborghini sold over 10,000 vehicles for the first time ever last year.

• Rolls-Royce had its best sales year ever last year, delivering over 6,000 cars.

With cars so expensive, luxury carmakers can make a profit selling much less than the average car brand. And the sales are likely to increase… the global luxury car market is estimated to reach $1.2 trillion by 2032.

Stock cars just aren’t as enticing anymore

For some customers, off-the-lot cars don’t hit like they used to. Hence, upscale automakers are increasingly offering fully-customizable high-end vehicles.

Bugatti’s Sur Mesure program offers total customization. One collector ordered a custom car covered in original artwork that took two years to make, covered in hand-drawn sketches.

Other luxury car brands have also seen a rise in demand for uber-personalized rides:

• Around 75% of Bentley’s customers requested custom options in 2023, up 43% from the same time last year.

  • Bespoke additions can add around $75,000 to the price of a car.

• Rolls-Royce Bespoke offers customizations on everything from embroidery to paint colors.

• However, if that isn’t enough, its Coachbuild program builds one car (from scratch) every two years, costing around $25 million a pop.

• At Porsche, customers can choose from over 160 paint colors or, if that’s not good enough, have their own bespoke color mixed for an additional $25,000 plus.

So, if you’ve got a couple million sitting around and you don’t know what to do with it, go get yourself a completely custom luxury vehicle. I’ve heard they’re the worst best investment you can make.

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Grab Bag

Would you scan your face to buy a razor?

In the new dystopian era of shopping, your grocery store will have to scan your face if you want some toothpaste. If you’ve been to a CVS, Walgreens, or target lately you’ve probably encountered items that were locked behind a case. No one likes waiting for an employee to unlock the case so you can get your razors, so, San-Diego based startup Indyme has found a solution.

What is it?

It’s called the “Freedom Case”, a touch screen device that protects high-value items. Here’s how it works:

• Customers use their cell phone number, retailers’ apps or loyalty cards, or facial recognition to open a case.

• The case monitors the shopper’s behavior and reports anything suspicious to staff.

Why is this a thing?

Retailers have said shoplifting is occurring more frequently, so, they’re locking up items they claim are popular with thieves, including cosmetics, contraceptives, and baby formula.

But, most people aren’t fans of the new system:

• Cases can reduce store sales by 15%-25%, according to Indyme CEO Joe Budano.

• One study found that 71% of shoppers are less likely to make an in-store purchase if confronted with theft deterrent measures.

• Newer brands suffer when customers can’t inspect products.

• Cases can be a big waste of time for employees working at already short-staffed retailers.

The Freedom Case could solve some of these problems by mostly removing employees from the process while still protecting merchandise.

One shopper told the Associated Press that entering her phone number felt “invasive,” but if you’d rather not scan your face in order to be able to shave (like myself), Freedom Case will let you call an employee.

Fast food used to be a cheap option, what happened?

Since when is a Big Mac meal $20? I want answers. While many of us used to go to fast food as a quick and cheap alternative to eating out, that is sadly no longer the case. Even Taco Bell and McDonalds are feeling pressure from customers due to rising costs.

What's the deal?

Yum Brands, the parent company of Taco Bell, KFC, and Pizza Hut, reported sluggish sales growth in Q4.

• Sales at Taco Bell restaurants open one year or more grew 3%, compared to 11% in Q4 2022.

• Pizza Hut sales dropped 4% in Q4, while KFC sales were stagnant.

• Meanwhile, McDonald’s US sales grew 4.3%, compared to 8.1% in Q3.

McSpensive

McDonald’s CEO Chris Kempczinski said US customers were still enjoying their happy meals despite 10% price hikes in 2023.

Now, he admits sales are slowing as eating at home becomes more affordable, especially among customers earning below $45,000 per year.

• McDonald’s prices vary across the nation, but some customers have reported $3 hash browns and $18 Big Mac meals.

• A single hash brown at my nearest McDonald’s, located outside Minneapolis, Minnesota, is $3.59 via DoorDash. Ironically, a 5 pound bag of potatoes from Amazon Fresh is the exact same price.

What’s their plan to lower prices?

• McDonald’s has promised price cuts and a return to its Dollar Menu.

• Taco Bell is already offering new deals, The Washington Post said they amount to about four pounds of food for around $21.

But with everything increasing in price, from streaming services to housing, fast food may just be one of many things Americans leave behind as they start to watch their wallets a bit more.

Fast Facts

Collegiate Cornhole: Two Colorado high-school seniors became the first students ever to receive scholarships to play Division I collegiate cornhole.

Federal Feet: At a sneaker convention in Philadelphia on Saturday, former president Donald Trump unveiled a new sneaker line, “Never Surrender High-Tops,” which were priced at $399 and sold out within hours.

Spendy Skin: A Swiss art collector paid seven figures for the tattooed skin of an Austrian performance artist’s back. The collector will just have photos until the artist dies, when he’ll be able to acquire the actual skin. Icky.

Political Pause: Instagram and Threads, both owned by Meta, will stop recommending political content to users unless they specifically opt in.

Satellite Sinker: The White House confirmed reports that Russia has obtained a “troubling” anti-satellite weapon, but said it is not capable of causing destruction on Earth.

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