Category Archives: Inflation

The Price of Campbell’s Tomato Soup in the Coronavirus Pandemic

The average discounted sale price of a Number 1 can of Campbell's Condensed Tomato Soup jumped 13 cents per can during 2020, rising from $0.86 to $0.99 from March through December as the coronavirus pandemic worked its way to, then through the U.S.

In essence, what happened is that increased consumer demand for Campbell's Tomato Soup during the pandemic led grocers to stop discounting their sale prices for the product as reflected in their weekly ads. Here's the latest update to our chart tracking the average discounted sale price of Campbell's iconic cans of tomato soup from January 1898 through January 2021.

Unit Price per Can of Campbell's Condensed Tomato Soup at Discounted Sale Pricing, January 1898 - January 2021

That situation may be starting to change in 2021, but in a way we think is very specifically attributable to the pandemic. In January 2021, we noted weekly ad circulars putting Campbell's tomato soup on sale at a 50% discount compared to their shelf pricing, with the 10.75-ounce cans carrying a unit price of 50 cents.

Winter months typically represent the peak season for purchases of Campbell's tomato soup, so these sales represent a very atypical event. We quickly found the reason for the discounts after visiting several grocery stores in a region that has been greatly affected by the winter surge in COVID-19 cases, where we found the coronavirus pandemic has prompted a shift in consumer demand:

Political Calculations: Relative Supply of Campbell's Condensed Tomato and Chicken Noodle Soups, January 2021

As you can see in the this picture, Campbell's Chicken Noodle is sold out, while there are ample supplies of Campbell's Tomato Soup. What this indicates is that consumers in this coronavirus-hit area have developed a strong preference for Chicken Noodle soup, which many perceive help relieve cold and flu symptoms.

The pandemic-influenced shift in consumer preference accounts for the relative oversupply of tomato soup with respect to chicken noodle soup, and thus, the atypical sale prices for Campbell's Tomato Soup at this point of the pandemic.

Altogether, all this means is that the pandemic has not changed the laws of supply and demand.

3/10/20: Eurocoin Leading Growth Indicator 3Q 2020


Eurocoin, a leading growth indicator for the euro area published by CEPR and Banca d'Italia posted another negative (recessionary) reading in September (-0.31) after marking peak growth contraction of COVID19 pandemic period in August (-0.64). This puts Eurocoin in negative territory for the 6th consecutive month since March 2020. 

Current forecast for 3Q 2020 growth remains at -3.5 percent q/q. Deflationary pressures are also building up. Euro area's 12 months average HICP forecast for 3Q 2020 stands at around 0.6 to 0.5.

As the chart above shows, Eurozone remains deeply in a recessionary territory based on Eurocoin forecasts and inflation dynamics. Longer term growth averages are shown in the chart below:

Overall, as noted above, one must take all leading indicators and forecasts with some serious warnings attached: we are in an environment where past models for forecasting economic aggregates become severely challenged.

17/9/20: Eurocoin Leading Growth Indicator 3Q 2020


Eurocoin, CEPR & Banca d'Italia leading growth indicator for Euro Area economy is pointing to renewed weaknesses in the Eurozone economy in August, falling to its lowest levels in the COVID19 pandemic period:

As the chart above shows, Eurocoin fell from -0.5 in July to -0.64 in August, its lowest reading since June 2009. The forecast September indicator is at -0.30. Through August, we now have five consecutive months of sub-zero readings. Based on July-August data and September forecast, we are looking at a GDP contraction of 3.5 percentage points in 3Q 2020. This is mapped out in the chart below:

As the chart above shows, average annual growth rate in the Eurozone for 2020 is now sitting at -6,33 percent, far worse than the previous low of -0.575 in 2009. In quarterly readings, we now have two actual and one forecast quarters of 2020 all performing worse than the peak of the Global Financial Crisis / Great Recession contraction (see green entry in the chart above).

As before the COVID19 crisis, Eeurozone economy is performing woefully. On no time horizon did Euro area manage to achieve average annual growth of 2% (chart above).

23/2/20: Fake Data or Faking Data? Inflation Statistics

As economists and analysts, almost all of us are trying - at one point or another - make sense of the, all too often vast, gap between the reality and the economic statistics. I know, as I am guilty of this myself (here's a recent example:

An interesting and insightful paper from Oren Cass of the Manhattan Institute dissects the extent of and the reasons for the official inflation statistic failing to capture the reality of the true cost of living changes in the U.S. over recent years (actually, decades) here: It is a must-read paper for economics students, analysts and policymakers.

His key argument is that: "Economists and families see three things differently:

  • Quality Adjustment. Products and services that rise substantially in price but in proportion to measured quality improvements can become unaffordable, while having no effect on inflation.
  • Risk-Sharing. New products and services can increase costs for the entire population yet deliver benefits to only a very small share, while having no effect on inflation.
  • Social Norms. Society-wide changes in behaviors and expectations can alter the value or necessity of a good or service, while having no effect on inflation."
In other words, over time, official inflation starts to measure something entirely different than the real and comparable across time consumption expenditure. As the result, you can have a paradox of today: low inflation is associated with falling affordability of life. 

An example: "In 1985, ... it would require 30 weeks of the median weekly wage to afford a three-bedroom house at the 40th percentile of a local market’s prices, a family health-insurance premium, a semester of public college, and the operation of a vehicle. By 2018, ... a full-time job was insufficient to afford these items, let alone the others that a household needs."

To address some of the shortcomings of the inflation measures, Cass offers a different metric, called COTI - Cost of Thriving Index - which basically amounts to the number of weeks that a given line of expenditure requires in terms of median income. Or "Weeks of Income Needed to Cover Major Household Expenditures". Two charts below illustrate:

And here is a summary table:

Excluding food, other necessities and looking solely at Housing, Health Insurance, Transport and College Education, the number of weeks of work at an overall median wage required to cover the basics of the necessary expenditure is now in excess of 58.4 weeks. For female workers' median wage, the number is 65.6 weeks. 

Which means that even before you consider other necessities purchases, and before you consider taxes, you are either dipping massively into debt or require a second income to cover these. 

Note: these do not account for income taxes, state taxes, property taxes, dental insurance. These numbers do not cover payments for water, gas, electricity. There is no mandatory car insurance included. No allowances for deductibles coverage savings (e.g. HSAs). No childcare, no children expenditures, no food purchases, and so on.

And even with all these exclusions, median income cannot afford the basics of living in today's America. 

A word from Fed, anyone?

The Price History of Campbell’s Tomato Soup

It's soup season, so what better time to update our records of the historic prices Americans have paid for an iconic can of Campbell's Condensed Tomato Soup, which now span January 1898 through January 2020!

Unit Price per Can* of Campbell's Condensed Tomato Soup at Discounted Sale Pricing, January 1898 - January 2020

As of January 2020, the average advertised sale price that Americans have paid for a 10.75 fluid ounce can of Campbell's condensed tomato soup is $0.85. Almost all of that price escalation has occurred since 10 April 1974, when the U.S. government lifted its price controls on food, where for the first 76 years of its history, Americans paid somewhere between $0.07 and $0.12 for each Number 1-size can of Campbell's Condensed Tomato Soup they bought.

If you do the math, where the average picnic-size can of Campbell's tomato soup could be bought for just $0.12 on sale as late as October 1973, that works out to an average annual rate of tomato soup inflation of about 4.3% for American consumers during the last 46+ years.

Fifteen years ago, it wasn't uncommon to see a can of Campbell's tomato soup on sale for $0.20. Today, it is becoming rare to see a sale price below $0.50 when the soup is heavily discounted, but still without having to use coupons.

Image Credit: unsplash-logoPaweł Czerwiński

Previously on Political Calculations

Our coverage of America's most iconic soup, presented in reverse chronological order!