The Indicator from Planet Money - Indicator Favs: The Case Of The Pricey Fritos

This favorite episode comes in the form of a mystery. Corn prices were falling, but the price of Fritos in the White House press corps break room went up by 20%. The Indicator was on the case.

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Content Keywords: Auntie room Scott Horsley NPR Cardiff
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NPR

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Cardiff and Stacy hear this is the indicator from Planet Money and all this week. We are re-airing some of our favorite episodes from the shows past. Yes. Today is one of my pics one of my personal favorites a mystery that we solved the case of the pricey Frito Stakes could not be higher that you might have called. This was kind of an instant classic of the wild goose chase podcast genres except in this case. We caught the dang juice and eat it. We were basically like private eyes who are hired by NPR economics correspondent Scott Horsley who back then was covering the White House this episode originally aired on September 28th, 2018 and Puritas.

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Hi, my name is Scott Horsley. I am a White House reporter for NPR news. So Glamorous to like hang out of the White House all the time. I'm right now I'm standing in the store The Press Corps break room, which is a little Auntie room just off the Brady briefing room. There's a there's a drinking fountain and a couple of restrooms and there are a couple of vending machines hear about how corn prices were falling and in the middle of writing that I came up to the employee break room to buy myself a bag of Fritos, and I noticed that the bag of Fritos had gone from a dollar and a quarter the old price to the new price of a buck and a half.

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And I had just written that corn Futures had fallen 12% since May so this was kind of puzzling to me. That's why I reached out to the smart people of Planet Money to try to solve this mystery, why are corn chips getting more expensive at a time when corn is getting Cheaper by the way, that's a lot more expensive. I mean, it's only a quarter but that quarter represent a 20% increase any other part of the economy, that would be criminal is Criminal and Cardiff. The indicator is on the case. This is the indicator. I'm Stacey Vanek Smith and I'm Carlos Garcia today on the show The Case of the pricey Frito story about perhaps the smallest of items can be the cause of unbelievable Terror in the loose change.

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Scott Horsley following the Fritos clue number one Fritos is owned by Pepsi Pepsi owns Frito-Lay which makes Fritos. In fact, the vending machines got uses in the White House is all Pepsi products and all of the products in the machine. Not just the Fritos got more expensive. So we call Pepsi they would not comment. They declined to comment. Okay find a sphinx. I know but luckily there was a second clue a note left at the scene of the crime. There is a note on the vending machine from the the people that stock the machine to our valued patrons effective in the next couple weeks the prices in the vending machine may be adjusted to offset increases we have received in product costs from manufacturers. So presently the wholesale cost of the Fritos have gone up and they're passing those along to us, but it is kind of curious at a time when corn prices are down.

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Free things in a Frito there's there's corn there's corn oil and salt you who specializes in food studies and seemed kind of offended by the idea that frenos might only have three friends in them to do with the price of corn chips by calling the vending machine company. Yeah, but they would not call us back. Nobody wants to give us a comment. So we turn to The Experts and Carolyn is an expert. She says the price of a processed food like Fritos as almost nothing to do with well food prices just break that idea that you have that food. Actually the food costs are an important component of any food product that you buy in the grocery store has a much bigger part of the cost of a food like Fritos is in things like labor and rent and transportation to Transportation. You have been in the news.

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Lately because trucking companies are complaining that they cannot find enough drivers to keep up with all the shipping needs that they have. So companies are kind of fighting for space in trucks right now, which pushes up the price of the space in those trucks and all that means the trucking is getting more expensive for companies Coke Pepsi Hershey General Mills and Procter & Gamble have all come out saying that hire shipping costs were going to be hard on their profits and possibly even affect prices so that could explain why Fritos might suddenly cost a lot more satisfied walking account for the whole $0.25 increase shipping costs were not acting alone. So on a hunch we called him it Sharma at BMO Capital markets and then analyzes food companies including Patsy and he gave us another clue about why the price is Fritos might have gone up. This was kind of an unexpected suspect aluminum tariffs.

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Aluminum because of Harriet has gone up as well so that the aluminum tariffs would hit them really hard and increase their costs if the u.s. Is not importing cheap aluminum from overseas. It will have to get aluminum from us suppliers and those us suppliers no longer have to compete with overseas aluminum suppliers soap, the domestic suppliers in the US can raise prices of all the companies admit looked at Coke and Pepsi were a couple of the hardest hit by aluminum tariffs monster and Coors, maybe Pepsi or Coke or just raise the price of their drinks to offset this more expensive can but they can't really do that right now because people are not drinking sugary drinks like they used to sales of soda have been following would you say that demand for soda has been flat

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Yes, I would say PizzaMan for soda has been Flats falling worse than flat concave. So Pepsi and Coke or just not in a position to be making those drinks more expensive right now. If that's true Americans are consuming less soda, but you know what? We are consuming more of what snacks we are simply backing of a growing category unlike many of the other food category is right and that allows companies that make snacks for the way. It is deleted the segment. It gives them potentially more pricing power power power to raise prices Pepsi might not be in a position to make it soda more expensive right now, but he knows he can raise the price of its delicious snacks because Americans love snacks so much. He loves NASA will pay the extra cash for those sweet sweet technically salty salty freezers.

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Do all of the stress eating or doing is actually surprises snacks to go up potentially suspect number three off the greatest suspect of all the love their Fritos, you know, we love all the snacks and we're eating more of them and we're replacing meals with them and Pepsi knows this and it knows that we will pay for that love it. So they charge more because they can okay. So Scott Horsley there you have it in the case of the price of Fritos. We have our killer or killers and we're like suspects though, right Stacy house back to Scott. What do you think the price of my Fritos has very little to do with the corn in the corn chips and everything to do with the aluminum not in the foil package of the Fritos, but in the Pepsi can in the truck it took to get the Pepsi can and maybe the Frito bag to my vending machine and my own.

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Inability to deny my tastebuds satisfaction from a salty snack in the afternoon. I'm going to go get right now.

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That's good corn.

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What episode was produced by Alexi Horowitz Ghazi and originally by Darius rafie on Whose edited by Jolie Myers and the indicator is a production of NPR.

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