WEBVTT - Big Take: What a Bacon, Egg and Cheese Teaches Us About the Economy 0:00:02.720 --> 0:00:07.200 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.600 --> 0:00:09.360 Hi, good Herdon. 0:00:11.280 --> 0:00:14.080 For the last few years, whenever I've needed a little 0:00:14.120 --> 0:00:17.640 extra morning sustenance, I visited a food cart outside the 0:00:17.640 --> 0:00:21.560 Bloomberg office. Could I have a egg and cheese sandwich, 0:00:22.320 --> 0:00:24.800 extra cutup, salt and pepper, please. 0:00:24.800 --> 0:00:27.840 Egg and cheese ease a five dollar? 0:00:28.680 --> 0:00:30.200 It used to be three fifty. 0:00:30.440 --> 0:00:31.880 Or they actually says thanksy. 0:00:33.560 --> 0:00:35.400 It must have been a while since I stopped by 0:00:35.440 --> 0:00:39.280 the cart, because Karen Hidalgo and her coworker Francisco told 0:00:39.320 --> 0:00:42.879 me two months ago they had to raise prices. Their 0:00:42.920 --> 0:00:45.440 egg and cheese sandwich on a roll went from three 0:00:45.479 --> 0:00:49.000 point fifty to five dollars, and their bacon, egg and 0:00:49.040 --> 0:00:52.320 cheese has reached six dollars. Add in the cost of 0:00:52.360 --> 0:00:54.640 a cup of coffee and a tip, and my once 0:00:54.760 --> 0:00:59.440 reliably cheap breakfast just ran me seven bucks. It's not 0:00:59.600 --> 0:01:03.760 just my beloved breakfast cart. Bloomberg actually tracks the price 0:01:03.840 --> 0:01:06.520 of the key ingredients in a bacon, egg and cheese 0:01:06.760 --> 0:01:09.880 plus a cup of coffee on a special bacon, egg 0:01:09.959 --> 0:01:14.440 and cheese index. It's updated every month using data from 0:01:14.480 --> 0:01:18.800 the Bureau of Labor Statistics or the BLS, and this year, 0:01:19.000 --> 0:01:22.040 the index has reached record highs. 0:01:21.920 --> 0:01:26.360 Our breakfast foods are very consistent consumer staples, and so 0:01:26.440 --> 0:01:29.800 they sort of become outsize indicators of inflation. 0:01:30.200 --> 0:01:33.920 Aileena Pang covers agriculture and commodities for Bloomberg. 0:01:34.200 --> 0:01:36.880 Even though economists really like to look at the rate 0:01:36.920 --> 0:01:39.720 of inflation, as a consumer, you tend to think, oh, 0:01:39.760 --> 0:01:42.880 my coffee costs this much today, and my coffee used 0:01:42.920 --> 0:01:45.080 to cost that much five years ago. 0:01:45.560 --> 0:01:48.440 In March twenty nineteen, the commodities that make up an 0:01:48.480 --> 0:01:52.520 average BC plus a coffee cost almost a dollar ninety. 0:01:52.800 --> 0:01:55.520 If you adjusted for inflation, that means the meal should 0:01:55.560 --> 0:01:58.840 cost nearly two forty today, but as of March twenty 0:01:58.880 --> 0:02:03.160 twenty five, it three dollars three twenty three to be exact. 0:02:03.920 --> 0:02:06.240 So the story of why these foods have gotten so 0:02:06.360 --> 0:02:11.880 expensive isn't just about inflation. It's also about supply and demand. 0:02:12.160 --> 0:02:15.080 When my customers complained to me recently at the price 0:02:15.120 --> 0:02:17.840 of gouging, you're gouging. 0:02:17.600 --> 0:02:19.120 Global weather patterns and. 0:02:19.120 --> 0:02:23.119 Disease, experienced veterans would tell me, like, young man, we've 0:02:23.120 --> 0:02:26.840 seen everything that could possibly happen in the egg marketing. 0:02:26.800 --> 0:02:28.440 Land wars, and trade wars. 0:02:28.560 --> 0:02:31.640 We're used to handling the natural barriers. The man made ones, 0:02:31.680 --> 0:02:32.840 we kind of struggle. 0:02:32.440 --> 0:02:35.360 With them, you know, the winds of consumers and the 0:02:35.360 --> 0:02:40.639 complexities of financial markets. Now, as Trump's sweeping tariff orders 0:02:40.639 --> 0:02:43.920 send shockwaves through the global economy and put new pressures 0:02:43.960 --> 0:02:47.480 on domestic commodities markets, we wanted to look closer at 0:02:47.560 --> 0:02:55.120 one sandwich that helps explain it all. Today on the show, 0:02:55.280 --> 0:02:57.680 we talk to people up and down the bacon, egg 0:02:57.720 --> 0:03:00.840 and cheese supply chain, from a Kentucky week farmer to 0:03:00.880 --> 0:03:03.640 a VP at an egg brokerage, to a coffee roaster 0:03:03.840 --> 0:03:07.840 in Lower Manhattan, and along the way. Bloomberg's expert commodities 0:03:07.880 --> 0:03:10.679 reporters helped us make sense of how this sandwich got 0:03:10.720 --> 0:03:15.600 so expensive and what it says about the American economy, tariffs, inflation, 0:03:16.040 --> 0:03:18.920 and more. This is the big take from Bloomberg News. 0:03:19.160 --> 0:03:27.919 I'm Sarah Holder. If you had to pick one ingredient 0:03:28.040 --> 0:03:30.919 to blame for the rising costs of a breakfast sandwich, 0:03:31.280 --> 0:03:35.040 it'd probably be eggs. 0:03:35.640 --> 0:03:38.760 Eggs have a weird pulse on the economy. 0:03:39.080 --> 0:03:42.440 Brian Muskajeri has worked in the egg industry for over 0:03:42.480 --> 0:03:45.560 a decade. He's currently a vice president at an egg 0:03:45.560 --> 0:03:50.000 brokerage called Eggs Unlimited. It also helps farms distribute their 0:03:50.040 --> 0:03:51.600 eggs to retail customers. 0:03:51.840 --> 0:03:53.880 When I got into the egg industry, my mom said, like, 0:03:54.280 --> 0:03:57.600 somehow you belonged in this industry. You just always loved eggs. 0:03:57.960 --> 0:04:00.720 Right now is a rough time to be an egg lover, 0:04:01.280 --> 0:04:04.400 as anyone who's been to the grocery store recently knows, 0:04:04.920 --> 0:04:08.960 the price of eggs has been uncomfortably high. The most 0:04:09.000 --> 0:04:12.320 recent data we have shows that consumer prices in March 0:04:12.480 --> 0:04:16.120 hit a new record over six twenty a dozen, double 0:04:16.240 --> 0:04:19.520 what eggs cost a year ago. Most people know, or 0:04:19.760 --> 0:04:23.599 think they know, what's behind that high price, bird flu. 0:04:24.240 --> 0:04:27.400 Since late last year, a new wave of avian influenza 0:04:27.440 --> 0:04:30.760 has been tearing through American egg farms, killing off tons 0:04:30.800 --> 0:04:32.200 of egg laying hence. 0:04:32.360 --> 0:04:35.520 Fifty million of three hundred and twelve million, you know, 0:04:35.800 --> 0:04:39.040 since the start of October. It's just an unprecedented supply 0:04:39.120 --> 0:04:42.680 loss than those prices have been passed along to the consumer, But. 0:04:42.920 --> 0:04:45.480 There may have been other dynamics pushing up the price 0:04:45.520 --> 0:04:48.520 of eggs. The Department of Justice has opened a probe 0:04:48.560 --> 0:04:52.200 to investigate potential price fixing by egg sellers and consumer 0:04:52.240 --> 0:04:54.240 reactions also had an impact. 0:04:54.440 --> 0:04:56.719 It created panic buying and hoarding, and the consumers are 0:04:56.720 --> 0:04:59.000 maybe buying more eggs than they typically bought, which just 0:04:59.080 --> 0:05:00.960 kind of fed into the show rang a little bit more. 0:05:01.440 --> 0:05:05.240 But consumers have hit their price ceiling since February, They've 0:05:05.279 --> 0:05:09.039 stopped buying as many eggs, and wholesale prices have started 0:05:09.080 --> 0:05:16.000 to fall. Consumers just haven't felt that yet. The second 0:05:16.080 --> 0:05:18.160 most important part of the bacon, egg and cheese, in 0:05:18.200 --> 0:05:23.000 my opinion, is the bread. Bread has also outpaced inflation 0:05:23.120 --> 0:05:27.360 since twenty nineteen. And to make bread, you need wheat. 0:05:27.880 --> 0:05:30.680 If you're flying around the country in the winter and 0:05:30.720 --> 0:05:34.360 you say something beautiful and green amidst all the brown 0:05:35.000 --> 0:05:37.200 and gray, that's a wheak field. 0:05:37.520 --> 0:05:41.320 That's Pat Clements, a second generation wheat grower and president 0:05:41.400 --> 0:05:45.680 of the National Association of Wheat Growers. When America's beautiful, 0:05:45.720 --> 0:05:49.240 green wheat fields are thriving, that doesn't always mean America's 0:05:49.240 --> 0:05:52.479 wheat farmers are making more money. Walk me through how 0:05:52.560 --> 0:05:53.680 you set prices. 0:05:54.080 --> 0:05:56.080 The issue is we don't set them, we take them. 0:05:56.640 --> 0:06:00.119 Market prices for wheat can vary pretty widely over the 0:06:00.160 --> 0:06:01.880 course of a year, and. 0:06:01.839 --> 0:06:05.560 From year to year, US wheat prices are heavily influenced 0:06:05.640 --> 0:06:10.480 by two dominant global suppliers, Russia and Ukraine. When those 0:06:10.520 --> 0:06:14.200 countries are cranking out wheat, the prices US farmers get 0:06:14.240 --> 0:06:18.159 are lower When Russia and Ukraine's supplies strained, growers here 0:06:18.240 --> 0:06:21.359 can make more so. Back in twenty twenty two, just 0:06:21.480 --> 0:06:25.440 after Russia's ground invasion of Ukraine, prices shot up. 0:06:25.680 --> 0:06:28.640 That was one of the last big run ups in 0:06:28.720 --> 0:06:29.560 the price of wheat. 0:06:30.000 --> 0:06:33.200 In January twenty twenty two, wheat was trading at about 0:06:33.240 --> 0:06:37.080 seven to fifty a bushel. In March, after Russia's invasion, 0:06:37.279 --> 0:06:41.160 it spiked, surpassing thirteen dollars a bushel, but it was 0:06:41.200 --> 0:06:44.279 a short lived jump. Russia and Ukraine found ways to 0:06:44.360 --> 0:06:48.280 keep supplies flowing, and that, combined with reduced demand in 0:06:48.320 --> 0:06:51.280 the US, has driven down the prices wheat farmers are 0:06:51.320 --> 0:06:54.200 getting for their product. A bushel of wheat is now 0:06:54.240 --> 0:06:56.159 trading at around five forty. 0:06:56.600 --> 0:07:00.360 In the meantime, our input costs have risen back oh 0:07:00.360 --> 0:07:04.400 Watch day twenty five to fifty, depending on which particular 0:07:04.440 --> 0:07:05.560 item you're talking about. 0:07:06.040 --> 0:07:10.200 Pat says the costs of pesticides, fertilizers labor and equipment. 0:07:10.800 --> 0:07:14.240 They're all up, and farmers fear that squeeze could get 0:07:14.280 --> 0:07:17.679 even worse depending on how Trump's trade war goes. 0:07:18.040 --> 0:07:20.200 That's the sort of million dollar question. 0:07:20.600 --> 0:07:23.200 Michael Hertzer covers commodities for Bloomberg. 0:07:23.520 --> 0:07:27.160 Prices could change pretty dramatically depending on how all these 0:07:27.200 --> 0:07:28.480 tariff negotiations go. 0:07:28.960 --> 0:07:33.080 Almost half of US wheat is exported. Mexico is our 0:07:33.120 --> 0:07:36.640 biggest wheat buyer, and right now the country has escaped 0:07:36.680 --> 0:07:40.320 the worst of Trump's tariffs. But if that changes, and 0:07:40.360 --> 0:07:44.800 if Mexico retaliates, that could hit US wheat producers hard. 0:07:44.840 --> 0:07:50.120 To interrupt the supply to a dependable nearby neighbor, you 0:07:50.200 --> 0:07:52.440 just can't imagine anything worse for the industry. 0:07:52.800 --> 0:07:56.000 From the ground in Kentucky, Pat says farmers are nervous 0:07:56.040 --> 0:07:58.360 that the trade wars could drive business away. 0:07:58.840 --> 0:08:02.200 When you interrupt these small markets, someone is waiting to 0:08:02.240 --> 0:08:06.800 take our place, perhaps some South American country we'll ship 0:08:06.800 --> 0:08:10.760 into Mexico. Perhaps it'll be Russia, Perhaps you know, can 0:08:10.840 --> 0:08:12.040 come from anywhere in the world. 0:08:12.360 --> 0:08:15.360 Tariffs could also drive up other costs of doing business, 0:08:15.760 --> 0:08:18.200 not just for wheat farmers, but all the way up 0:08:18.240 --> 0:08:21.120 the bread supply chain. That's on top of costs that 0:08:21.160 --> 0:08:24.200 have already been rising and driving up the cost of bread, 0:08:24.640 --> 0:08:27.960 labor costs, packaging, transportation, marketing. 0:08:28.240 --> 0:08:31.760 A loaf of bread that costs four dollars and a half. 0:08:32.240 --> 0:08:36.439 The farmer's share of that it's fourteen cents. Our part 0:08:36.480 --> 0:08:37.439 isn't moving the need. 0:08:39.240 --> 0:08:43.360 So we've covered eggs and bread. What about cheese? For 0:08:43.440 --> 0:08:45.920 that we had to call one of our experts. 0:08:46.280 --> 0:08:49.400 We typically watch Class three milk futures. That's like the 0:08:49.400 --> 0:08:51.520 class of milk that typically goes into cheese. 0:08:51.800 --> 0:08:55.280 That's Bloomberg's I lean up. Hang again. She follows the 0:08:55.360 --> 0:08:58.680 cheese market, and she says prices have been relatively stable 0:08:58.720 --> 0:09:02.400 in recent years. That's despite a cheese craze that started 0:09:02.480 --> 0:09:03.880 during the pandemic, and. 0:09:03.800 --> 0:09:06.560 That trend has just sort of accelerated, and it's really 0:09:06.600 --> 0:09:10.000 been a boon to the broader US dairy industry, just 0:09:10.080 --> 0:09:13.720 because fluid milk is no longer as popular as it 0:09:13.760 --> 0:09:16.439 once was at its peak, and so now what the 0:09:16.520 --> 0:09:19.240 dairy industry likes to say is that people are eating 0:09:19.320 --> 0:09:21.360 their milk instead of drinking it. 0:09:21.440 --> 0:09:24.320 Since the increased demand for cheese has been offset by 0:09:24.400 --> 0:09:28.480 increased production, the cost of this domestic dairy product has 0:09:28.480 --> 0:09:32.319 remained relatively low. But we also get some of our 0:09:32.440 --> 0:09:35.040 fanciest cheeses from the European Union. 0:09:35.280 --> 0:09:38.040 They make a lot of the high grade specialty cheeses 0:09:38.120 --> 0:09:39.080 that everyone loves. 0:09:39.360 --> 0:09:41.880 I'm not sure most of us order breakfast sandwiches with 0:09:42.000 --> 0:09:45.920 imported French bree, but if you are, watch out. The 0:09:46.000 --> 0:09:49.160 European Union is subject to the US as ten percent 0:09:49.280 --> 0:09:53.880 tariff on imports. A more traditional pick might be American 0:09:53.960 --> 0:09:57.480 cheese produced right here in the US, but the US 0:09:57.679 --> 0:10:00.880 also exports a lot of cheese products. More than half 0:10:00.920 --> 0:10:04.480 of US dairy exports go to Mexico, Canada, and China. 0:10:05.320 --> 0:10:08.920 Canada has already put retaliatory tariffs of twenty five percent 0:10:09.040 --> 0:10:13.120 on American cheese, butter, and dairy spreads, while China's levied 0:10:13.160 --> 0:10:16.520 one hundred and twenty five percent duties on all US imports, 0:10:16.920 --> 0:10:21.440 which would include dairy products. What if Mexico were to follow. 0:10:21.840 --> 0:10:25.199 Mexico is by far the biggest buyer of American dairy products, 0:10:25.240 --> 0:10:27.960 and so there is concern there that if Mexico were 0:10:28.000 --> 0:10:32.160 to retaliate by putting tariffs on US cheese, then that 0:10:32.200 --> 0:10:34.360 would take away a market for US farmers. 0:10:34.720 --> 0:10:39.200 Overall, though, Aileena sees domestic cheese prices staying pretty calm 0:10:39.320 --> 0:10:46.360 amid broader tariff turbulence. So we've tackled eggs, bread, and cheese. 0:10:46.760 --> 0:10:48.920 But what's going on with the last two pieces of 0:10:48.960 --> 0:11:03.680 this breakfast puzzle bacon and coffee? That's coming up. We've 0:11:03.679 --> 0:11:07.400 been digging into why a classic American breakfast combo, the bacon, 0:11:07.400 --> 0:11:10.040 egg and cheese sandwich plus a cup of coffee, is 0:11:10.080 --> 0:11:13.480 getting more expensive in the US, and how those prices 0:11:13.480 --> 0:11:17.920 could fluctuate further under Trump's trade war. We've covered the bun, 0:11:18.200 --> 0:11:21.959 the e, and the c. Now let's bring home the bacon. 0:11:24.360 --> 0:11:28.480 Bloomberg Commodities reporter Michael Hertzer told me that understanding bacon 0:11:28.520 --> 0:11:31.160 prices actually starts with beef. 0:11:31.760 --> 0:11:34.360 The US beef cattle herd is the lowest since the 0:11:34.440 --> 0:11:39.240 nineteen fifties, so beef is in pretty tight supply, and 0:11:39.600 --> 0:11:42.920 one of bacon's keys to popularity has ben. It's always 0:11:42.920 --> 0:11:45.160 been something of alternative to beef. 0:11:45.600 --> 0:11:48.760 In the past few decades, bacon has been heavily marketed 0:11:48.800 --> 0:11:51.760 by restaurants and food companies who wanted to sub in 0:11:51.960 --> 0:11:55.599 pork because beef was so pricey, and all that exposure 0:11:55.640 --> 0:11:59.080 has helped bacon evolve from strictly a breakfast side to 0:11:59.160 --> 0:12:02.120 something you see on salads, on burgers, any meal of 0:12:02.160 --> 0:12:05.640 the day. All this drives up demand, but. 0:12:05.679 --> 0:12:09.840 Supply bacon is cut from the pork belly and there's 0:12:09.880 --> 0:12:12.480 a sort of a finite amount of it. Each pig 0:12:12.559 --> 0:12:16.320 only has one belly in Because it's so popular, bacon 0:12:16.360 --> 0:12:18.839 has a sort of built in demand base, so. 0:12:18.960 --> 0:12:22.120 US consumers have spent decades driving up the cost of 0:12:22.160 --> 0:12:25.960 bacon by buying more. Today it costs almost seven dollars 0:12:26.000 --> 0:12:29.120 a pound, but Trump's policies could change that. 0:12:29.360 --> 0:12:31.480 A lot of the folks working inside the meat plants 0:12:31.520 --> 0:12:36.920 are immigrants, and any sort of deportation efforts could have 0:12:37.480 --> 0:12:40.040 a tangible impact on just the number of workers that 0:12:40.080 --> 0:12:43.080 are available or the number of workers that are willing 0:12:43.120 --> 0:12:46.680 to show up if they're in fear of being taken away. 0:12:47.040 --> 0:12:50.360 And once again, tariffs could upend everything. 0:12:50.760 --> 0:12:55.199 Mexico is the top buyer of US pork, and them 0:12:55.400 --> 0:12:58.920 not having a tariff will allow US pork to continue 0:12:58.920 --> 0:13:03.360 to go to Mexico. If that changes, theoretically, pork could 0:13:03.440 --> 0:13:06.600 become cheaper in the US if Mexico is buying less. 0:13:06.840 --> 0:13:09.679 In the short term. Pork prices could drop if the 0:13:09.720 --> 0:13:14.000 supply of pork exceeds the demand, but Michael thinks farmers 0:13:14.040 --> 0:13:17.760 would adapt raise fewer pigs, bringing the price back up 0:13:17.920 --> 0:13:21.640 in the medium term. So we're down to the last 0:13:21.800 --> 0:13:25.560 ingredient in our breakfast. Order something to wash it all down. 0:13:26.000 --> 0:13:28.640 I'll go Burista's Choice coffee. 0:13:30.679 --> 0:13:34.200 These increases over the last six months have been monumental, 0:13:34.800 --> 0:13:35.920 and they've been fast. 0:13:36.800 --> 0:13:40.800 That's Peter Longo, the owner of Porto Rico Importing Company, 0:13:40.960 --> 0:13:43.720 a coffee shop and roaster in New York's Greenwich Village. 0:13:44.400 --> 0:13:47.040 The store has been around since nineteen oh seven, and 0:13:47.080 --> 0:13:49.520 Peter took it over from his parents in the seventies. 0:13:49.800 --> 0:13:52.079 And how much was a cup of coffee at that time? 0:13:52.240 --> 0:13:55.280 Oh man, a cup of coffee? What's a dime? Maybe? 0:13:55.679 --> 0:14:01.040 Yeah, coffee hasn't cost a dime in deck gates. But 0:14:01.120 --> 0:14:04.680 in the past year coffee prices have truly been on 0:14:04.800 --> 0:14:08.240 a tear. Today a pound of beans costs Peter about 0:14:08.280 --> 0:14:11.600 four dollars. That's nearly double what he was paying last year. 0:14:12.000 --> 0:14:17.080 Things that are causing price increase is scarcity, fears of 0:14:17.160 --> 0:14:23.920 weather changing, of the temperature. Global warming has affected farming 0:14:24.560 --> 0:14:25.040 a lot. 0:14:25.640 --> 0:14:28.840 A drought in Brazil damaged bean supply in the world's 0:14:28.880 --> 0:14:30.160 top producing country. 0:14:30.480 --> 0:14:36.040 But I think the speculative investment has boosted the price 0:14:36.080 --> 0:14:38.720 of coffee and made it more volatile. 0:14:42.120 --> 0:14:47.880 Speculative investment, in other words, economic forces beyond supply and demand. 0:14:48.920 --> 0:14:52.880 To understand how markets influence coffee prices, we had to 0:14:52.920 --> 0:14:56.680 call back Eileena Pang, the agriculture reporter we heard from earlier. 0:14:57.160 --> 0:14:59.480 She told me there are two groups of people who 0:14:59.520 --> 0:15:03.880 get involve in coffee markets. There are commercial traders. 0:15:03.800 --> 0:15:05.520 People who have a steak in the market, so like 0:15:05.560 --> 0:15:08.840 you're a coffee roaster, you're a coffee producer, you are 0:15:09.080 --> 0:15:12.880 a coffee trading house. And then there are speculative traders, 0:15:13.320 --> 0:15:15.480 like the hedge funds, and their goal is not to 0:15:15.480 --> 0:15:18.520 take delivery of beans. Instead, they want to play the 0:15:18.560 --> 0:15:22.120 coffee market kind of like the stock market, buying futures 0:15:22.160 --> 0:15:24.520 at a certain price, hoping that they'll be able to 0:15:24.560 --> 0:15:27.480 sell them for more than they bought. The thing is 0:15:27.680 --> 0:15:30.720 that right now, the roasters, the coffee houses, the people 0:15:30.720 --> 0:15:34.080 who do want to actually buy coffee and actually take 0:15:34.120 --> 0:15:37.920 delivery of it, they've been cautious, trying to buy just 0:15:38.040 --> 0:15:41.920 what they absolutely need and nothing more, hoping prices will 0:15:41.920 --> 0:15:45.240 come down. The traders aren't willing to keep a bunch 0:15:45.240 --> 0:15:47.800 of coffee on hand unless they know they have a 0:15:47.880 --> 0:15:51.600 roaster to sell it to, and companies like Starbucks and 0:15:51.680 --> 0:15:55.120 big roasters, who would normally buy a lot in advance, 0:15:55.200 --> 0:15:56.680 are kind of reluctant to do that. 0:15:57.120 --> 0:16:00.160 And since there are fewer buyers in the market right now, 0:16:00.200 --> 0:16:04.880 any activity can make prices fluctuate wildly. Tariffs are making 0:16:04.880 --> 0:16:08.600 the coffee market even more volatile. Last week, the US 0:16:08.680 --> 0:16:12.040 hit the world's second biggest grower, Vietnam, with levies of 0:16:12.120 --> 0:16:15.520 forty six percent. This week, Trump announced who his pausing 0:16:15.560 --> 0:16:19.080 that tariff at least for ninety days, but his universal 0:16:19.160 --> 0:16:20.920 ten percent tariff still applies. 0:16:21.200 --> 0:16:25.080 Importers are already trying to get clauses into their contracts 0:16:25.440 --> 0:16:29.280 so that those costs get passed on to coffee roasters, 0:16:29.680 --> 0:16:32.160 and eventually there is a sense that that would make 0:16:32.200 --> 0:16:33.480 it to the consumer level. 0:16:34.040 --> 0:16:37.760 Traders are now expecting bean prices to get even higher, 0:16:38.200 --> 0:16:42.120 so high that consumers might eventually start buying less coffee, 0:16:42.440 --> 0:16:46.320 which could force prices down. All this weighs on coffee 0:16:46.320 --> 0:16:49.440 sellers like Peter, who's now selling a pound of beans 0:16:49.520 --> 0:16:53.560 for sixteen to ninety nine, up a whole dollar since September. 0:16:54.080 --> 0:16:58.080 There's only a finite point to which you can raise 0:16:58.120 --> 0:17:00.640 your prices before to fix your sales. 0:17:02.160 --> 0:17:06.399 After all these conversations about all these different commodities, you 0:17:06.480 --> 0:17:11.000 might be noticing some trends we did. Bacon, cheese, and 0:17:11.040 --> 0:17:15.359 bread prices are either stable or slightly elevated, but coffee 0:17:15.400 --> 0:17:19.440 and eggs prices are up a lot. Those two ingredients 0:17:19.480 --> 0:17:22.680 have been driving a lot of the increases in Bloomberg's bacon, egg, 0:17:22.720 --> 0:17:26.480 and cheese index, and even though market and wholesale prices 0:17:26.480 --> 0:17:30.520 were expected to decline for those commodities, the relief hasn't 0:17:30.560 --> 0:17:34.320 hit consumers, and now tariffs have created a whole new 0:17:34.400 --> 0:17:37.840 level of uncertainty about where these prices are headed next. 0:17:38.960 --> 0:17:41.320 The bacon, egg, and cheese index we have is a 0:17:41.320 --> 0:17:42.840 little bit backwards looking. 0:17:43.040 --> 0:17:45.760 Remember the index is based on data from the Bureau 0:17:45.840 --> 0:17:49.200 of Labor Statistics. It's not a snapshot of where prices 0:17:49.240 --> 0:17:53.000 are today or tomorrow, but where they were last month. 0:17:53.760 --> 0:17:56.880 That's the way US inflation data works too, and why 0:17:56.880 --> 0:17:59.960 it can sometimes feel like the fed's latest CPI figures 0:18:00.359 --> 0:18:06.480 don't perfectly reflect Americans' experiences of the economy, and inflation 0:18:06.840 --> 0:18:09.879 is sticky. That's something Jerome Powell, the Chair of the 0:18:09.920 --> 0:18:13.080 Federal Reserve, acknowledged at February's FED meeting. 0:18:13.359 --> 0:18:16.400 The grocery bill is about past inflation. 0:18:16.600 --> 0:18:19.480 Really, consumers are still hurting. 0:18:19.440 --> 0:18:21.719 And they're not wrong to be unhappy that prices went 0:18:21.800 --> 0:18:23.840 up quite a bit and they're paying a lot for 0:18:23.880 --> 0:18:25.520 those things and commodities. 0:18:25.560 --> 0:18:29.680 Reporter Michael Hertzer says that's because if commodity prices can 0:18:29.720 --> 0:18:33.840 be highly reactive, the prices consumers pay are. 0:18:33.720 --> 0:18:36.800 Not from the star level. It's hard to raise prices, 0:18:37.480 --> 0:18:39.560 you know. If you get an opportunity when everyone is 0:18:39.560 --> 0:18:42.880 talking about inflation and you raise prices, you don't really 0:18:42.880 --> 0:18:46.200 want to give that back. So for the consumer, you 0:18:46.320 --> 0:18:50.800 just got to, I guess, clip the coupons and try 0:18:50.800 --> 0:18:51.800 to find savings. 0:18:52.400 --> 0:18:56.200 Or you can get creative, like Peter Longo the coffee roaster. 0:18:56.680 --> 0:19:01.879 My go to breakfast sandwich is the egg McMuffin. But 0:19:03.119 --> 0:19:06.840 I noticed it got very, very expensive, and I was 0:19:07.440 --> 0:19:09.520 just talking with the girl behind the counter and she said, 0:19:09.520 --> 0:19:13.879 you gotta buy the sausage McMuffin and throw the sausage 0:19:13.880 --> 0:19:16.679 away because they had one of those deals, so you 0:19:16.760 --> 0:19:20.320 could get two sausage mcmuffins for two bucks. 0:19:21.480 --> 0:19:24.320 I guess there's always a deal to be found somewhere. 0:19:27.920 --> 0:19:30.879 This is The Big Take from Bloomberg News. I'm Sarah Holder. 0:19:31.160 --> 0:19:34.040 This episode was produced by Julia Press. It was edited 0:19:34.040 --> 0:19:38.040 by Tracy Samuelson, Millie Munci, and Isis al Naida. It 0:19:38.080 --> 0:19:40.720 was fact checked by Audre Natapia and mixed and sound 0:19:40.720 --> 0:19:44.560 designed by Alex Sugia. Our senior producer is Naomi Shadan. 0:19:44.680 --> 0:19:48.600 Our senior editor is Elizabeth Ponso. Our deputy executive producer 0:19:48.720 --> 0:19:52.960 is Julia Weaver. Our executive producer is Nicole Beamsterboorg Sage 0:19:52.960 --> 0:19:56.920 Bauman is Bloomberg's head of Podcasts. If you liked this episode, 0:19:57.080 --> 0:20:00.000 make sure to subscribe and review The Big Take wherever 0:20:00.119 --> 0:20:02.840 you listen to podcasts. It helps people find the show. 0:20:03.720 --> 0:20:06.160 Thanks for listening. We'll be back next week.