What are the factors causing us to pay more for food?

During the peak of the pandemic, food inflation was mainly driven by high prices of meat, especially beef and pork.

That was largely due to supply and demand disruptions, but that is no longer the case. A USDA Economist explains that could be why they have gotten every estimate wrong this year.

The most recent Consumer Price Index shows food prices in May jumped 1.3 percent at the grocery store, a significant increase for an entire year, let alone one month. Prices are up 12 percent from this time a year ago.

USDA could not find one single category of food that costs less, and that list is extensive, but there is a small bright spot.

“We do see some slower-growing categories: fruits, vegetables, and sweets, but all other categories, with the exception of eggs, are somewhere between 10 and 20 percent.”

USDA Economist, Matt MacLachlan says food inflation has now expanded into every category, meaning they are taking a more comprehensive approach to what is driving it. Some of the issues are high consumer demand.

“And then input costs are just changing it. It is no secret that energy prices are up this year significantly. Some of those price increases proceed the Ukrainian conflict but have certainly been exacerbated by that event, and commodity prices, things like corn, wheat, and soy, are quite expensive right now, too.”

On top of that, High Path Avian Influenza has reduced poultry flocks, killing 40 million birds. Many of them are egg-laying hens.

“This is showing up in the retail egg sector. Most of the birds lost, approximately 40 million, have been among laying hens. We have had about two million lost this month so far, so we are still not entirely sure what the trajectory of this outbreak is going to look like and how it is going to affect egg prices, but so far we can see that it’s already increased egg prices substantially. There was a 10 percent increase last month, a five percent increase this month, bringing us to a year-over-year change of 32.2 percent.”

Chicken prices are up 17 percent on the year and are still rising. USDA says we have not seen these kinds of increases since 1980.


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