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Fast food affordability

This isn’t the first instance of social media buzzing about escalating fast food prices.

Burger fans have been encountering ballooning menu prices in America. The surging cost of the key ingredient has contributed to this. According to a recent CNN report, two all-beef patties are about 5.9% pricier than this time last year.

In February, a TikTok user said McDonald's is "becoming a luxury item" and the video went viral.

Last summer, a Twitter user shared a photo of a McDonald’s menu at a Connecticut rest stop, where a Big Mac meal was listed at $17.59. The user asked, “These McDonald's prices are nuts right?”

Fast food chains, traditionally known for being affordable, now face challenges in staying accessible to consumers.

During his most recent earnings conference call, McDonald’s CEO Chris Kempczinski said, “I think what you're going to see as you head into 2024 is probably more attention to what I would describe as affordability.”

The company’s CFO Ian Borden further stated that pricing decisions will be “consumer led,” adding that it’s the franchisees who set prices in their respective restaurants.

Jon Taffer, the executive producer and host of “Bar Rescue,” recently blamed policy makers and noted that consumers are starting to “get used to the $30 hamburger.”

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Have we won the war against inflation?

Headline inflation has come down over the past year. In February 2024, the U.S. consumer price index saw an annual increase of 3.2%, down from its peak 9.1% increase registered in June 2022.

However, a slowdown in the rate of inflation doesn't necessarily translate to reduced prices. For instance, the latest CPI report showed that, over the last year, the index for food away from home rose 4.5%, while shelter index increased by 5.7%.

Sticky inflation is a concern as the Federal Reserve prepares to cut rates. But some experts don't see a significant problem.

Nobel laureate Paul Krugman recently wrote an op-ed for The New York Times about January and February's higher than expected inflation data, saying, "I believe that there are good reasons not to take those hot inflation numbers too seriously. I’m actually a bit more worried about rising risks of recession."

Economists surveyed by Bloomberg don't believe the recent pickup in inflation will change the Fed's forecast for three interest-rate cuts this year and four in 2025.

Inflation can eat away at the value of your hard-earned money, leaving you with less purchasing power than you started with. To safeguard your buying power, you might want to look into inflation-fighting assets. The rich use them to grow their wealth faster than the pace of inflation.

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Jing Pan Investment Reporter

Jing is an investment reporter for MoneyWise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.

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