Latest / Wages and Prices with Fexingo: Cost of Living, Pay Raises, and Workers' Purchasing Power / Why Your Raise Is Finally Beating the Cost of a Cheese Plate
Transcript
- Lucas: If you've walked past a cheese counter lately and noticed the price tag doesn't make you wince the way it did two years ago — you're not imagining it. Luna: I actually did a double take at Whole Foods last weekend. A wedge of Sartori Montamor that used to be, like, eighteen dollars was down to thirteen. Lucas: That's exactly the kind of thing we're talking about. For years, artisanal cheese was one of those 'treat yourself' items that seemed to get more expensive every quarter. But the data from last month's CPI report tells a different story now. Luna: Let me guess — the headline was food at home down point one percent, but cheese specifically? Lucas: Right. The CPI for cheese fell about 1.2 percent year-over-year through June. That might not sound dramatic, but when you stack it against average hourly earnings hitting $37.60 — up about 3.2 percent from a year ago — the gap is real. Luna: So my raise is finally beating the cheese plate. That's almost poetic. Lucas: It is. And it's not just one brand or one store. The Bureau of Labor Statistics data shows that the price decline is broad-based — cheddar, gouda, parmesan, even the fancy washed-rind stuff. Luna: What changed? Two years ago everyone was saying cheese inflation was baked in — pun intended — because of feed costs and labor shortages at dairies. Lucas: Those pressures have eased significantly. Feed costs are down, diesel for transport is cheaper, and the labor market in dairy farming has stabilized. But there's another factor — the pandemic-era boom in home cheesemongering has faded. People are eating out more, so supermarket demand for premium cheese has softened. Luna: And the World Cup probably didn't hurt bars and restaurants, but that's more about beer and wings than cheese plates. Lucas: Exactly. The Fed's Beige Book actually mentioned that restaurants saw a boost from the World Cup, but for grocery cheese, it's the opposite — more dining out means less at-home grazing. Luna: So the cheese case is a microcosm of what's happening across luxury-adjacent groceries: demand normalizing, supply chains smoothing out, and wages finally catching up. Lucas: That's the framework. And this is actually a really good example of why you can't just look at the headline inflation number. Core CPI is still running at 3.5 percent annually, but within that, you've got categories like cheese that are actually deflating. Luna: Which means if you're a cheese lover, your purchasing power for that specific thing has improved dramatically in the last year. Lucas: Right. Your raise is beating the cost of cheese. And that's a tangible win — it's not abstract. Luna: You know, if today was actually useful to you — if walking through the economy with us has made something click — the way these stay ad-free is listener support. Lucas: Yeah, it's pretty straightforward. If you find yourself thinking 'I'd like to keep getting this without commercials,' you can buy me a coffee dot com slash fexingo. Luna: No pressure, just a way to keep the conversation going. And we do appreciate it. Lucas: So back to cheese. The other question is whether this is sustainable. Are we looking at a temporary dip or a structural shift? Luna: I've been wondering that. Milk prices are still volatile, and if the drought in California worsens, feed costs could spike again. Lucas: That's the risk. The 10-year breakeven inflation rate is at 2.22 percent — that's basically where the bond market thinks inflation will average over the next decade. So they don't expect a big reacceleration. But a localized shock to dairy could reverse the cheese trend. Luna: But for now, the average consumer is in a sweet spot. Wages are up, cheese is down, and even the broader food-at-home index is flat to slightly negative. Lucas: Let's put a number on it. If you're a median earner — about $1,200 a week — and you buy a pound of specialty cheese every week at the old price of $18 versus today's $13, that's $260 a year back in your pocket. That's real. Luna: And that's just cheese. If you start looking at other categories where prices are falling — like electronics, some apparel, used cars — the cumulative effect is significant. Lucas: Which brings us back to the bigger picture: wage growth is finally outpacing inflation for a meaningful slice of the basket. The employment cost index for wages is up, CPI is flat to down, and the gap is widening. Luna: So the cheese plate is a symbol. It's not just about dairy — it's about whether the average person feels like they're getting ahead. Lucas: Exactly. And right now, the data says yes — at least for cheese lovers. Luna: I'll toast to that with a glass of something that pairs well. Maybe next episode we can talk about wine prices. Lucas: That's a good idea. The data on wine is actually mixed — imports are getting cheaper because of a strong dollar, but domestic vintages are still sticky. Luna: We'll save that for another day. For now, I'm just happy my gouda is affordable again. Lucas: And that's the kind of economic win that matters. Small, measurable, and delicious.