Rising food prices, along with escalating energy costs, helped push U.S. inflation to a 31-year high in October with the Consumer Price Index jumping 6.2 percent.
“Food prices for both groceries and dining out rose by the most in decades,” The Wall Street Journal reported.
The U.S. Bureau of Labor Statistics reported on Nov. 10, 2021, that the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.9 percent in October on a seasonally adjusted basis after rising 0.4 percent in September.
Over the last 12 months, the index increased 6.2 percent before seasonal adjustment. The last time the U.S. saw prices rise like this was in the fall of 1990 with September (6.16 percent), October (6.29 percent), November (6.27 percent), and December (6.11 percent) all about 6 percent.
“Persistently higher inflation—triggered by a faster-than-anticipated but uneven economic recovery, trillions of dollars in pandemic-related government stimulus and other factors—is hitting consumers’ wallets. At the same time, a rebounding economy and healthy household balance sheets are both stoking demand and cushioning price increases,” The Wall Street Journal reported.
Food-at-Home and Food-Away-From-Home Prices Jump
Supermarket News reported that food pricing was up 5.3 percent year-to-year in October with a monthly gain of 0.9 percent for the second straight month.
Food-at-home prices were up 5.4 percent and food-away-from-home prices were up 5.3 percent year-to-year with food-at-home increasing 1 percent after climbing 1.2 percent in September. Food-away-from-home, which was up 0.5 percent in September, shot up to 0.8 percent in October.
“And the sticker shock is hitting where families tend to feel it most. At the breakfast table, for instance: Bacon prices are up 20 percent over the past year, egg prices nearly 12 percent,” reported the Associated Press.
Supermarket News says increases came from all six major grocery store food group indexes including:
- Meat, Poultry, Fish and Eggs up 11.9 percent, including 20.1 percent for beef and 14.1 percent for pork.
- Non-alcoholic beverages up 4.5 percent, including roasted coffee up 5.6 percent and carbonated drinks up 5.2 percent
- Other food from home up 4.1 percent, including sugar up 5.2 percent, salad dressing up 7.7 percent and peanut butter up 6 percent
- Cereal and bakery products up 3.5 percent, including flour up 5 percent
- Fruit and vegetables up 3 percent, including apples up 6.7 percent and canned vegetables up 6.6. percent
- Dairy up 1.8 percent, including milk up 4.3 percent
“Ahead of two of the most food-centric U.S. holidays, supply chain disruptions are raising grocery bills — and consumers are noticing,” said the Morning Consult’s Emily Moquin. “Amid media reports about surging grocery costs, nearly 7 in 10 U.S. consumers expect prices for food and nonalcoholic beverages to increase this holiday season compared with previous years.”
Del Monte Announces Price Increases
Consumer expectations of even higher food prices are likely to come true considering news such as the announcement from Fresh Del Monte Produce Inc. in late October.
The company, which markets and distributes products to retail stores, foodservice operators, wholesalers, and distributors, announced price increases were coming soon.
Perishable News reported that Del Monte was “raising prices on bananas (including organics and plantains), pineapples and fresh-cut fruit effective November 1, 2021. The move comes in response to unprecedented market conditions and inflationary pressures being felt across all industries, affecting Fresh Del Monte particularly as it relates to production and supply chain.”
The company in a release said that as it “makes the near-term decision to increase prices on its products, Fresh Del Monte is continuing to proactively work on its long-term growth strategy focused on innovation, efficiency, and further leveraging its vertical integration to boost productivity and further strengthen the company’s position.”
Mohammad Abu-Ghazaleh, Fresh Del Monte Chairman and Chief Executive Officer: “Despite our efforts to mitigate these increasing costs within our supply chain, they are simply too great to absorb. The unparalleled costs have been persistent and show no signs of regulating. After thoughtful consideration, it is necessary to implement inflation-justified price increases in an effort to maintain our continuous supply and service levels. We understand that these pressures are not unique to our business and therefore are working collaboratively to mitigate these pressures – within our supply chain and with our business partner relationships.”
Consumers Already Noticing Grocery Store Bill Increases
Even before price increases by large suppliers like Del Monte reached the grocery store, consumers were already noticing a bigger bill at the supermarket check out in October.
Morning Consult reported that one-Quarter of consumers, in all income groups, spent more on groceries in October:
- All adults reporting that 26 percent spent more last month on groceries
- Income under $50K: 21 percent spent more
- Income $50-100K: 30 percent spent more
- Income over $100K: 34 percent spent more
While inflation is rising prices across all industries and sectors, Bank of America Global Research October Consumer Spending Survey finds that food costs are top of mind.
When asked: “Where have you noticed the most dramatic price increases recently (select up to 3)?” consumers responded:
- No. 1 selected was grocery store with almost 60 percent picking
- No. 2 was restaurants/eating out/bars nearly 20 percent
- No. 3 was takeout/food delivery at over 15 percent
Inclement Weather Part of the Food Price Calculation
It is not just supply chain problems and rising energy costs that are putting pressure on food prices. Inclement weather is also playing a role.
“Various agricultural commodities — wheat, sugar, beef, and corn — are up by double-digit percentages this year and due to inclement weather and import backlogs, coffee prices are up over 50 percent year-to-date,” Greg McBride, chief financial analyst for Bankrate, told NBC News. “While energy prices are up due to a surge in demand, food inflation is a consequence of supply chain constraints and unfavorable weather impacting harvests.”
The rising food prices are also bound to hurt those the most that can least afford it.
“Households on a fixed income aren’t benefiting from wage growth, are still dealing with ultra-low-interest income, but are facing the pervasive price increases that are hitting everyone,” McBride said.
Contact FreshByte Software today to see how our software can help.
