Grocery shopping with a Fed Reserve president: ‘It’s sticker shock’
MINNEAPOLIS — One of Neel Kashkari’s unofficial barometers of inflation is a big tray of frozen lasagna.
It’s become a staple in his household, enough to cover two meals for his family of four. The price can vary at stores, he points out, but at the Lunds & Byerlys where he regularly shops, the Stouffer’s party-size meat lasagna used to be about $16.
“It went up to about $18,” he says while pushing a shopping cart on a recent Saturday. “And then I think the prices leveled off for a bit. It will be interesting today to see whether the price has come down or the price has continued to go back up.”
He finds the answer in the freezer section: $20.99.
Kashkari, president of the Federal Reserve Bank of Minneapolis, will have a vote this year on how high interest rates go in the Fed’s ongoing fight against inflation. So his views on whether price increases are cooling off fast enough will be closely watched as the economy hangs in the balance.
He’s already indicated that he may push to move rates higher than some other members of the Fed’s rate-setting committee.
It’s a notable shift for a policymaker who had a reputation at the Fed, until recently, of being the most resistant to raising rates. He started moving in the other direction last year as inflation soared at the highest rate in four decades. Since then, price increases have been slowing down, but still remain at elevated levels.
The debate among Fed officials this year will be how much more to raise rates to bring inflation down, with the tradeoff being higher unemployment and a possible recession.
For Kashkari, he sees a greater risk if the Fed doesn’t move rates high enough.
“If we don’t do enough, and inflation becomes embedded and inflation expectations climb, that could take years to bring the economy back into balance, and that’s very costly and very damaging.”
Kashkari’s weekly grocery shopping trips, which he started doing for his family after the pandemic hit, have been a frequent reminder for him of the higher prices that Americans have been grappling with on a daily basis.
As he weaves his way through the store, he sees plenty of other examples of inflation as he picks items from the handwritten shopping list his wife jotted down that morning.
Bananas. Broccoli. Bacon. Milk. Butter.
Some of those items have doubled in price, he notes, roughly recalling the pre-pandemic prices.
“It’s sticker shock,” he says, shaking his head while in the checkout lane.
Similar to gas, food prices can fluctuate more than other goods and services. Kashkari has seen some grocery items beginning to drop in price. But in other cases, he says, the higher prices might be around for a while.
“A lot of the prices that we’re seeing now are probably going to be with us,” he says. “Hopefully they come back down, but more likely they’re going to stop climbing.”
Kashkari has an eclectic résumé. An engineer by training, he worked for Goldman Sachs and was a Treasury Department official in charge of the big bank bailout during the 2008 financial meltdown. He’s dabbled in politics, unsuccessfully running as the Republican candidate for governor of California in 2014.