With new scandals in the papers every day, it’s hard to shock us.
Hiding a secret love child? Old news. Texting inappropriate pics? Yawn.
But stealing tomatoes? Now you’ve got our attention.
This year, thieves executed a successful heist of more than $250,000 of Florida tomatoes—six tractor-trailers full of fruit. And believe it or not, this unusual pilfer may be a direct result of current economic trends.
The real culprit is inflation: Tomato prices have recently experienced greater than normal inflation due to an unusually cold winter in Mexico. Freezing temperatures badly damaged the tomato crop, and the price rose from $1.84 per pound last year to a whopping $2.44 per pound earlier this year. The tomato price spike even led some fast food chains like Wendy's to distribute tomatoes on burgers by request only (policies vary by franchise, so this may or may not have impacted you).
Given the price hikes in grocery stores, selling Florida tomatoes on the black market has suddenly become a very profitable proposition. To pull off the heist, thieves set up a bogus trucking company to trick farmers into giving away their precious produce. You say "tomato," I say "payday."
It's Not Just Tomatoes, Either
While the bad weather in Mexico has made tomato inflation particularly striking, price inflation is affecting all aisles in the grocery store. Disruptions in normal weather patterns as well as rising energy costs have contributed to price inflation for food this year. Beef and pork prices rose 10.4% from April 2010 to April 2011, milk prices rose 10.9% and coffee prices rose 13.8%.
This year, it's estimated that food inflation will be between 4.5% and 5.5%, leading to a notable hike in food prices—especially since last year.
Meanwhile, total inflation, which takes into account all goods and services, was at 3.6% this May—another big jump, considering that the 2010 average inflation rate was 1.6% and the 2009 rate was negative, at -0.4%. Over the past century, the average total inflation has historically been a little more than 3%.
It's estimated that food inflation will be between 4.5% and 5.5%, leading to a notable hike in food prices—especially since last year.
The Things People Steal ...
Rising inflation may be the culprit behind a rash of other weird thefts around the country. Some people in California have been knocking down power poles and stealing the copper wiring inside them. The price of copper has risen high enough to make this a profitable undertaking: In 2009, copper sold for $1.25 per pound, whereas it now costs about $4 per pound.
It doesn't end there. According to The New York Times, thieves have stolen at least $315,000 of human hair from salons in Texas, Michigan, Illinois and California. As demand for human hair has increased due to beauty trends, prices for high quality hair have gone up. Two years ago, burglars broke into a beauty supply store in Chicago and robbed its cash register; this year, thieves broke into the same store and took $90,000 of human hair instead.
Stay Afloat, Despite Inflation
From tomatoes to copper wiring, inflation erodes the value of a dollar because it takes more money to buy the same items as before. Let’s say that you put $1,000 in your desk drawer. Assuming inflation continues at the average rate of 3%, your $1,000 will have the buying power of only about $450 in 20 years. Even though you won't have lost money in the literal sense—you still have $1,000 dollars—your money will have less buying power.
Make Your Money Work for You
To avoid having your savings eroded, ensure that the money you have is also earning money. You could do that by putting it into a savings account or a CD, but those interest rates are generally only a little over 1%. If inflation is around 3%, that's not enough.
The best way to make returns that keep pace with inflation is to invest your money--whether in a retirement account or a regular brokerage account. Investing comes with risks, but historically the stock market returns about 7% on average (with some good years and some bad years), which beats the rate of inflation with room to spare.
Check out our Investing Bootcamp
Note that investing right now might not make sense for everyone, so check out our LV Goes Live webinar to find out whether it makes sense for you.
Next up on LearnVest: How to topple a power pole while making a human hair wig and eating a tomato. (Just kidding.)