According to the U.S. Bureau of Labor Statistics (BLS), inflation is low. Prices, however, have been climbing in at least one sector: food.
The Consumer Price Index (CPI), which measures the cost that Americans pay for a broad array of goods and services, has risen just 0.6 percent over the past 12 months, primarily because energy prices have tumbled 12.6 percent. The food component of that index, though, has jumped 4.5 percent during the same period, and prices for food consumed at home have increased 5.6 percent.
Among the items that have seen the biggest price hikes in grocery stores are:
- Beef and veal, up 25.1 percent
- Eggs, up 12.1 percent
- Pork, up 11.8 percent
- Poultry, up 8.7 percent
The rising prices of meat and eggs have been offset, somewhat, by relatively tame inflation for fruits and vegetables, the cost of which has ticked up 2.3 percent, according to the BLS. Even so, some vegetable prices have jumped, too. Potatoes have soared 13.3 percent in the past 12 months, and tomatoes have risen 8.4 percent.
There are three main causes of the rise in food prices, and all are tied to the COVID-19 pandemic. The first is demand. People are stocking up on food because they want to limit their trips to the store. Demand has been so high that companies that handle food processing and distribution are among the few that are hiring right now, says Mark Zandi, chief economist at Moody’s Analytics.
The second reason is the shift from eating in restaurants and schools to eating at home. “We have a very delicate national food supply chain that assumes that we all adhere to our normal seasonal dining patterns, and that was shaken up by these big changes,” Kim Rupert, managing director of Action Economics, observes. For example, distributors have to switch from packaging milk in half-pint cartons for schools to the gallon and half-gallon containers that people prefer at home. That takes time, drives down supply and increases prices.
Finally, there’s the disease itself, which forced the closure of several meat processing plants earlier this year. Many of those have reopened, but they have to provide greater protections for their workers.
The U.S. Department of Agriculture expects food prices to decline next year, as production could return to relatively normal levels. The USDA forecasts a 1.5 to 2.5 percent decrease in the cost of beef and virtually flat egg prices.
We appreciate our friends at AARP for content information in this article.