[mech987987]

Demand for cheerios is elastic- people can substitute by buying oatmeal. Demand for salmon fillets is elastic- people can substitute by buying tuna, beef, beans, tofu, etc.... for just about any given food item there are substitutes to provide similar high quality nutrition.

You are simplifying too much by saying demand for food is inelastic. It's true that people consume roughly the same amount of calories every day. However, Grocery stores are a low-margin business. Your grocery store is in constant negotiations with suppliers that vary from local produce farmers to General Mills to Anhauser-Busch. Some suppliers may be making high margins.

The idea that increased consolidation has caused this inflation has to compete with other ideas- such as:

The productive output of all sorts of businesses decreased during the pandemic at a time when the money supply increased. There were more dollars chasing fewer goods. As the pandemic eased off, the productive output was able to climb back to capacity, but money supply increases (and lagging effects of reduced inventory of goods) remained in effect.

In a time where there is less production, the production that remains is more valued. Margins would tend to increase in this environment.

How do you prove that the consolidation effect is more relevant than the macroeconomic picture?

[OGWhales]

> Demand for cheerios is elastic- people can substitute by buying oatmeal. Demand for salmon fillets is elastic- people can substitute by buying tuna, beef, beans, tofu, etc.... for just about any given food item there are substitutes to provide similar high quality nutrition.

This would be a good argument but I feel it’s undermined by the heavy consolidation in the food market, no? If the same company is selling each product, then it doesn’t matter as much if a consumer switches between them

I agree with the rest of what you said. I certainly don’t know how to prove which is more relevant but I believe the supply shock and excess money played the largest role, however I think it’s wrong to dismiss either as both seem to be at play.

[s1artibartfast]

It matters even in a Consolidated Market. The cost of a thousand calories of steak is different than the cost of a thousand calories of dried beans.

Just because the cost of dry beans has gone up 10% doesn't mean that you can't save money by eating them instead of beef.

If customers don't switch to beans despite high prices for steak, it tells you something about the demand for beef relative to the cost sensitivity of customers.