‘We haven’t seen a spike in food inflation yet’: Food prices haven’t risen so steeply since 1979, with basic groceries up nearly 40%

By Zoe Han

Rising grocery prices are hurting low-income households, says Morning Consult’s chief consumer spending economist

Food prices continued to rise in August, putting pressure on low- and middle-income households in particular.

The cost of food for home preparation rose 13.5% from August 2021, the highest growth rate since March 1979, according to government data. The annual rise in the US consumer price index was 8.3% in August. Overall, food was 11.4% more expensive than a year earlier, the largest annual increase since May 1979. The cost of eating out in August was up 8% year-on-year other.

Eggs saw the biggest price increase among grocery products. They were 39.8% more expensive in August than a year earlier. Both supply and demand contributed to the upward pressure on prices. Bird flu wiped out about 10% of egg production across the country earlier this year, an egg producer previously told MarketWatch.

Avian flu has also had an impact on poultry production. Chicken prices were 16.6% higher in August than they had been a year earlier. In addition to the extreme heat and limited supplies, consumers have shifted their purchases to chicken rather than the generally more expensive beef, according to Brian Earnest, chief economist for animal protein at CoBank, a national cooperative bank serving industries. of rural America.

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Dairy and processed food prices have also skyrocketed. Margarine rose 38.3% in August year-over-year, and the price of butter rose 24.6%, mainly due to the cost of raw materials such as oil and cream soy. Flour and prepared flour mixes were 23.3% more expensive than a year earlier. Cracker prices were up 17.7% on the year, and frozen baked goods, such as pies and pies, were up 18.1%.

Despite price declines for beef and pork, processed meats such as hot dogs and deli meats continued to post higher prices in August. Frankfurter prices rose 18.3% in August compared to August 2021, while lunch meat prices rose 18.2%. That’s partly due to an industry-wide labor shortage, CoBank’s Earnest said, with the higher wages needed to attract workers being passed on to consumers.

Prices for fresh fruits and vegetables rose 7.9% in August, and lettuce, in particular, was 15.2% more expensive. The Wall Street Journal reported that extreme heat in western states could be a contributing factor. Growers say the high summer heat has fueled lettuce diseases and drastically reduced the size of the crop.

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“We haven’t seen a spike in food inflation yet,” Scott Brave, chief consumer spending economist at market research firm Morning Consult, told MarketWatch. “And the longer it goes on, the more it goes up, the harder it becomes for low-income people in particular to afford those price increases.”

Low-income families have felt the most impact of inflation, as a higher proportion of their disposable income is spent on gas, utilities and groceries, experts say. National average gasoline prices have fallen in recent months, from a high of more than $5 a gallon in June to $3.69 in September, according to the Energy Information Administration.

Consumers, especially low-income households, have benefited from lower gasoline prices. But rising food prices have absorbed much of that relief, Morning Consult’s Brave said.

According to a survey by LendingTree, about two-thirds of Americans said in late July that they had worried at least once in the previous month about not being able to afford groceries. Women, Gen Zers and millennials were among the most concerned about rising food prices.

At the same time, households with young children and low-income families also reported high levels of stress about putting bread on the table. The report found that households with annual incomes below $35,000 were the most worried about inflation, with 74% expressing concerns about the affordability of groceries.

American families can save money by eating at home, as the cost of an average meal at a restaurant is 3.5 times more than having the same meal at home with items purchased at home. grocery store, according to David Portalatin, a food analyst. to market research firm NPD Group.

More people could choose to visit restaurants less frequently in response to stubborn inflation, he told MarketWatch. “Inflationary pressures will actually drive more consumers to grocery stores than to restaurants,” even though grocery store prices have risen at a faster rate than restaurant prices, Portalatin said. “Grocery is always much cheaper than eating out.”

-Zoe Han

 

(END) Dow Jones Newswire

09-17-22 1656ET

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