Here we are in July already. 2021 is halfway over. And, happily, it’s National Ice Cream Month! I do love ice cream on a hot summer day. And, boy has it been hot out there this summer.
And, a funny thing has happened to ice cream. The average cost of a half-gallon of ice cream is the same today as it was in 2014!
Ice cream and inflation
Back in July 2014, I wrote a blog about inflation. It featured ice cream and the increasing costs of dairy ingredients. I was making the point that inflation melts away retirement savings like ice cream on a summer day. You can read that previous blog post here.
And it is true. Inflation is the silent risk that eats away your hard-earned savings over time. You can look at it as your money doesn’t buy as much as it used to. Or, that the price of things you buy keeps going up. Either way, you get the concept of inflation.
So, using one example of a grocery item that increases in price, I track the cost of ice cream. It’s a favorite food group for my family, and probably yours. I wanted to estimate how much ice cream would cost over the next 30 years. Based on the data available in 2014, I estimated how much a half-gallon would likely cost:
- about $7.00 in 2024,
- $9.00 in 2034, and
- $12.00 in 2044.
A surprise finding
While checking on the last five years of the average cost of ice cream, I was reminded just how inflation really works. Turns out, since 2014, the cost of ice cream actually decreased. With the January 2021 numbers in, it is tracking back up. But by May, 2021, it was back down again. Month by month, there is a lot of volatility.
Year by year, you get a better look at the trends. Here’s a snapshot of the past few years:
You can see that the actual average price has barely moved. The same container of ice cream costs a penny less this January than it did in January 2014. Year over year, there were price changes. But, the cost stayed quite steady. Great for consumers. Terrible for the dairy farmers.
The surprising reminder with this example is that inflation doesn’t always go straight up. Costs often bounce around here and there. And they do in fact go down at times. So, when you’re trying to estimate your retirement expenses, inflation doesn’t always mean you will see dramatic price increases year over year. Some prices will stay about the same over periods of time. But, the best plans assume your overall costs of groceries will trend up.
Inflation is rising but steadier
In 1980, a half-gallon of ice cream cost $1.76 versus $5.00 today. That’s a whopping 186% increase over the last 40 years.
With retirement income planning, we tend to focus on needing a paycheck for 30 years of spending. So, considering cost changes between1990 and today, you’ll find ice cream costs are up 86%. It’s still a big increase, but that’s what inflation is. An ongoing increase in prices. On pretty much everything.
The effect of several years of deflation in the price of ice cream during the tracking period does illustrate some price stability. We should be so lucky to see this situation in everything we buy.
Overall, the general cumulative inflation is 226% since 1980. That translates to your overall budget has had to increase 226% to buy the same “stuff” you were buying 40 years ago. If you were buying $50 of groceries in 1980, the same items would cost $163 this year. I don’t know about you, but that seems to be about where our spending is at the grocery store.
Whatever happened to Sealtest Ice Cream?
While looking around for fun ice cream facts for this post, I all of a sudden had a flashback. Sealtest Ice Cream. Do you remember that brand? Seems like that was the brand of choice in my house while we were growing up.
Well, here’s a news item from The Daily Press about Sealtest’s fate:
The Sealtest brand has been discontinued. Kraft General Foods produced Sealtest and Breyers brands.
In 1993 Unilever, the largest ice cream marketer in the world, acquired the ice cream operations of Kraft General Foods and combined it with the Good Humor frozen novelties company to form Good Humor-Breyers.
What can you expect over the next few national ice cream months?
Since the early 1990s, general inflation has largely been managed by the Federal Reserve Board. They target inflation rate between 1.5% and 3.0%. The net effect is cumulative inflation of only 106% between 1990 and today. And, more price stability for the consumer.
It will be interesting to see if there is a big increase in the cost of ice cream coming in the next year or two. My estimate was for a $7.00 price tag in 2024. We’ll have to wait a few years to see about that.
Meanwhile, this chart from FRED, the Federal Reserve Economic Data, gives you a good view into ice cream costs. They started tracking ice cream in 1980 and the most recent data is for May 2021.
So, enjoy National Ice Cream month. Know that you’re paying for your favorite flavor today at the same price as you did in 2014. If that isn’t reason enough to run to the freezer for a scoop, I don’t know what is!
