Banana Prices Stay Sane

Felix Salmon (0:08)

Hello, and welcome to Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Bloomberg. I'm here with Elizabeth Spiers of Blue Sky.

Elizabeth Spiers (0:23)

Not my employer, but I'm there often.

Felix Salmon (0:24)

She's there a lot and we are going to talk about that later on in the show. And of course, I'm with Emily Peck of Axios.

Emily Peck (0:32)

Hello.

Felix Salmon (0:32)

And we are going to talk about Emily's favorite subject, which is inflation and why it doesn't seem to be affecting banana prices even though it should be. We are going to talk about Facebook's new agentic AI, fluffy mascot named Muse, which is very cute. We are going to talk about Kelly Clarkson because of course we are. We have a Slate Plus segment on whether you need to have passed the bar exam to be a lawyer. It's all kind of fun this week, so I would recommend you stay tuned because all of that is coming up on Slate Money.

So Emily, I want to talk to you about your favorite subject.

Emily Peck (1:23)

Cheese?

Felix Salmon (1:24)

Inflage.

Emily Peck (1:25)

Oh, inflation. I thought cheese. I do really like cheese.

Felix Salmon (1:29)

Can we talk about a different type of yellow food?

Emily Peck (1:32)

Yes. Oh, my gosh. It's not one of my favorite foods, but it is one of my favorite topics, and I am talking about bananas.

Felix Salmon (1:41)

So bananas are fascinating. You managed to find this in-depth investigation into banana pricing in The New York Times, which basically said, and correct me if I'm wrong here, that everything about bananas is becoming more expensive in terms of the diesel cost of moving them across the planet, the cost of refrigerating them, the cost of providing fertilizer to grow them, because that comes from natural gas, of course. Basically, all of the cost inputs when it comes to bananas have been going up. Meanwhile, the real cost of bananas is down 50 percent in the past 10, 20 years or so.

Elizabeth Spiers (2:19)

Everything about bananas is bananas?

Felix Salmon (2:21)

Well, this is really fascinating to me, that somehow the nominal price of bananas has stayed very constant, even as inflation has raged for however long. So the bananas have literally never been cheaper in the history of America.

Amazingly, with all of these incredible inflationary pressures coming from every angle, they remain the cheapest they've ever been. It seems to be like where everyone else complaints about inflation everywhere, that the bananas are the one thing where they really ought to be skyrocketing in price, they ought to be doing what coffee is doing, and they're not.

Emily Peck (2:58)

Nope. Nope. Bananas, I feel like such a rube when I say, when I pronounce bananas after Felix has said elegantly, bananas. But, and I didn't realize this, although perhaps it should have been obvious all along because bananas are so cheap. I think Anna Swanson's Peace in the Times reports 65 cents a pound on average or something in the store.

Felix Salmon (3:19)

Between sort of 15 cents and a quarter each, which you can't buy anything for a quarter.

Emily Peck (3:25)

No, apparently for a long time, they've been a loss leader for supermarkets. Their markets are expected to have cheap bananas, and they have them, and they, I guess, get people into the store, which is what a loss leader is supposed to do.

Felix Salmon (3:40)

Gasoline is a loss leader for convenience stores as well, and that isn't cheap.

Emily Peck (3:45)

Yeah, and the price of gasoline, as we well know, fluctuates quite a bit up and down, but bananas are, I mean, they're just like the steady eddy, but she has quotes in this piece where the people in the industry from Del Monte saying like, we're in a crisis, I don't know how much longer we could tow the banana line. Like things are getting really, really bad.

Felix Salmon (4:06)

It seems like not so much of a crisis. The worst thing that happens is they go up in price a little for the first time in 40 years. And like, that doesn't seem like the end of the world. They're still dirt cheap.

Elizabeth Spiers (4:17)

This is why I don't really understand why they're so universally a loss leader. Like I've never gone into a grocery store because I thought they had cheap bananas, you know? Right. But is it more like a cultural thing where like Costco can't raise the prices or hot dogs or Arizona IT has to stay at a dollar? Is this just something that American grocery stores have just decided collectively cannot raise this price at the consumer?