Point number 4 is correct. This was discussed on planet money a few days ago:
https://www.npr.org/transcripts/1092447326Since I buy cheap food in the form of unprocessed raw ingredients like rice, beans, oats, milk, eggs, nuts, etc my prices have gone up considerably. If I lived off of handmade organic rice cakes my prices would have gone up much less. This increase has to be taken with a grain of salt though because if you're eating fancy food you were already spending multiple times for your groceries than I was. Even with 20% increase in the price of my non-organic beans and rice Im spending way less money on food than a fancy food consumer.
transcript:
WONG: The third reason inflation hits lower-income folks harder has to do with the kinds of things people buy. And let's just focus on food because food is a big chunk of the CPI basket that's driving up inflation right now.
MA: And here's an important thing just to keep in mind when we talk about how the price of food is tracked by CPI. The food categories in the CPI basket, they don't actually differentiate between, let's call it, the fanciness of the product.
WONG: Like how black tie your groceries are?
MA: Yeah, exactly. You know, there are not separate categories for, you know, organic free-range eggs versus standard factory farm eggs. Instead, all these products are thrown together in the same basket, which is used to calculate the consumer price index. And Xavier says that's a problem.
JARAVEL: Even if you just look at food products, the types of food products that the low-income buy actually had higher inflation rates.
WONG: So think the not-premium products - regular oranges and regular eggs. Xavier found these products got more expensive over time.
MA: And counterintuitively, that did not happen for the fancier stuff - you know, the stuff that people with higher incomes were more likely to buy.
WONG: You know, like fancy mustard where you can see the individual, like, little grains in there versus just, like, the stuff in, like, a big yellow plastic bottle.
MA: Like the small batch artisanal granola.
WONG: Or like the really fancy tuna that says it's, like, pole caught by fishermen wearing white gloves. I don't know how they catch the tuna.
MA: Yeah, or the pasture-raised kombucha.
WONG: (Laughter) Yeah. Xavier says prices for these types of products - the fancy mustard, the bespoke tuna - have actually dropped over time. In other words, they've experienced deflation. And a big reason for the expensive stuff actually getting cheaper has to do with growing wealth inequality.
JARAVEL: If you have the rich getting richer, that creates growing markets for luxury products, premium products, and so you look at organic products. Organic food in the U.S. has had deflation for years because you have more and more supply of organic food. More and more farmers change their farms and get the USDA labels for organic products. That brings competition up. That brings prices down.
MA: And so more companies were sprouting up to compete for the dollars of these affluent consumers. Xavier says that was less the case for the less premium products. So an example he gives from his research is that in 2004, the cost of organic spinach was 60% higher than the regular stuff. But a decade later, that difference in price shrank to just 7%.
WONG: So the price of fancy spinach went down at the same time that the price of non-fancy spinach went up.