Here's what's up with food prices
Aug 14, 2024 22:41:28 GMT
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Post by Gem Girl on Aug 14, 2024 22:41:28 GMT
www.yahoo.com/news/food-prices-changed-over-past-112929026.html
I've never understood why people blamed the President....
The New York Times
How Food Prices Have Changed Over the Past Four Years
Madeleine Ngo
Wed, August 14, 2024 at 7:29 AM EDT·6 min read
8.2k
WASHINGTON — A central issue has plagued the Biden administration for most of its term: the steep rise in grocery prices.
Polls have consistently found that inflation remains a top concern for voters, who have seen their budgets squeezed. A YouGov poll published last month found that 64% of Americans said inflation was a “very serious problem.” And when it comes to inflation, several surveys suggested that Americans were most concerned about grocery prices.
Despite the gloom about grocery costs, food price increases have generally been cooling for months. On Wednesday, new data on inflation for July will show if the trend has continued.
Economists in a Bloomberg survey think that inflation overall probably climbed by 3% from a year earlier, in line with a 3% rise in June. That sort of reading would probably keep officials at the Federal Reserve on track to cut interest rates in September. Investors, who were recently rattled by signs of an economic slowdown, have looked to rate cuts as a support for markets.
Some voters have blamed President Joe Biden for rising prices, pointing out that food costs have soared over the past four years. Former President Donald Trump, when accepting the Republican nomination last month, highlighted grocery costs and said that he would “make America affordable again.”
In the year through June, grocery prices rose 1.1%, a significant slowdown from a peak of 13.5% in August 2022. Many consumers might not be feeling relief, though, because food prices overall have not fallen but have continued to increase, albeit at a slower rate. Compared with four years ago, grocery prices are up about 20%.
The surge in prices is the result of a mix of supply and demand pressures, many tied to the pandemic and other global events over which the White House has little control.
What led to the spike in grocery costs
After the pandemic’s onset, consumers turned away from dining out and panicked shoppers stockpiled groceries. Workers became infected with COVID-19, making it harder to staff grocery stores, warehouses and meat processing plants, raising costs for businesses.
Then, in early 2022, Russia’s invasion of Ukraine pushed up energy prices and the cost of commodities like grains and vegetable oils. That raised the costs of producing and transporting food products. More recently, droughts and an avian flu outbreak have further strained food supplies.
The confluence of these events has made groceries more expensive as companies have passed along cost increases to consumers. The average price for a dozen large eggs, for example, has nearly doubled from four years ago, to $2.72 from $1.55. Prices for cereals and bakery products have climbed about 25% over the same period, while fruits and vegetables were up about 14%.
Those increases have largely been driven by the cost of transporting, packaging and processing food products, said David Ortega, a food economist at Michigan State University. “The vast majority of the cost of food is because of things that happen once that food leaves the farm gate.”
As supply chain issues have eased, grocery inflation has returned to levels that more closely resemble the typical rates before the pandemic. That has been good news for consumers, but, Ortega noted, shoppers should not expect to see a significant decline in overall grocery prices any time soon.
“We’re not going to go back to prices that we were used to before COVID,” Ortega said.
But wage growth was now outpacing grocery price increases, he said, pointing to a recent White House analysis that found it took about the same number of hours for the average, non-managerial worker to buy a week’s worth of groceries as it did in 2019. Still, since wage growth did not keep up with food price increases for a while, consumers have been through a “very tough period” and not everyone has seen their wages keep pace.
Where food prices are headed
“We are pretty much back to what you would expect to see food prices doing,” said Omair Sharif, founder of the research firm Inflation Insights.
Where food prices are headed
Several economists said they expected to see grocery inflation remain around current rates in the coming months, barring unforeseen shocks. The Agriculture Department has predicted that prices for “food at home” would rise 1% in 2024, down from 5% last year.
Some categories have seen higher than normal inflation recently, Sharif noted. For instance, beef and veal prices were up 5.1% in the year through June.
But economists have also noted that some products have dropped in price. Ham prices have fallen 4.3% from a year ago. Milk and seafood prices have each declined 1% over the same period.
In the coming months, climate-related disruptions could strain food supply. Meagan Schoenberger, a senior economist at KPMG, said a highly active hurricane season this year had the potential to wipe out entire crops.
“The more disruptions we have, the higher the inflation is going to be for food,” she said.
High food costs continue to pose a political challenge for the Biden administration. On the campaign trail, Vice President Kamala Harris, the Democratic presidential nominee, has acknowledged that prices are too high, vowing to take on price gouging on “Day 1.” In recent months, Biden has accused food and beverage companies of earning excess profits and urged grocery chains to lower costs.
Some food companies have signaled that they plan to slash prices for certain products in response to consumers pulling back on purchases. Last month, PepsiCo executives said they intended to cut prices or offer more sales on certain salty snacks and other products after years of price increases.
Many shoppers remain frustrated, said Christopher B. Barrett, an agricultural economist at Cornell University, as they struggle with broader price increases that strain other parts of their budget.
“Housing costs in particular are up sharply since the start of the pandemic,” Barrett said. “That crimps people’s ability to buy the food they need.”
Jerlyn Heisz, 79, a retired nursing assistant in Platteville, Wisconsin, said her monthly grocery costs had increased to as much as $150, up from about $100 before the pandemic. At the same time, her rent and electricity bills have also increased in recent years.
“I really can’t afford anything beyond the necessities,” she said.
Heisz, who lives on a $1,500 monthly income, said she had noticed that her money did not go as far as it used to, even as she has cut back on buying fresh fruits and vegetables. She said it had been about two years since she last bought a steak.
Still, Heisz, who described herself as a “lifelong Democrat,” said she did not blame Biden for steeper food costs.
“I don’t believe that it’s any one person’s fault,” she said.
I've never understood why people blamed the President....
The New York Times
How Food Prices Have Changed Over the Past Four Years
Madeleine Ngo
Wed, August 14, 2024 at 7:29 AM EDT·6 min read
8.2k
WASHINGTON — A central issue has plagued the Biden administration for most of its term: the steep rise in grocery prices.
Polls have consistently found that inflation remains a top concern for voters, who have seen their budgets squeezed. A YouGov poll published last month found that 64% of Americans said inflation was a “very serious problem.” And when it comes to inflation, several surveys suggested that Americans were most concerned about grocery prices.
Despite the gloom about grocery costs, food price increases have generally been cooling for months. On Wednesday, new data on inflation for July will show if the trend has continued.
Economists in a Bloomberg survey think that inflation overall probably climbed by 3% from a year earlier, in line with a 3% rise in June. That sort of reading would probably keep officials at the Federal Reserve on track to cut interest rates in September. Investors, who were recently rattled by signs of an economic slowdown, have looked to rate cuts as a support for markets.
Some voters have blamed President Joe Biden for rising prices, pointing out that food costs have soared over the past four years. Former President Donald Trump, when accepting the Republican nomination last month, highlighted grocery costs and said that he would “make America affordable again.”
In the year through June, grocery prices rose 1.1%, a significant slowdown from a peak of 13.5% in August 2022. Many consumers might not be feeling relief, though, because food prices overall have not fallen but have continued to increase, albeit at a slower rate. Compared with four years ago, grocery prices are up about 20%.
The surge in prices is the result of a mix of supply and demand pressures, many tied to the pandemic and other global events over which the White House has little control.
What led to the spike in grocery costs
After the pandemic’s onset, consumers turned away from dining out and panicked shoppers stockpiled groceries. Workers became infected with COVID-19, making it harder to staff grocery stores, warehouses and meat processing plants, raising costs for businesses.
Then, in early 2022, Russia’s invasion of Ukraine pushed up energy prices and the cost of commodities like grains and vegetable oils. That raised the costs of producing and transporting food products. More recently, droughts and an avian flu outbreak have further strained food supplies.
The confluence of these events has made groceries more expensive as companies have passed along cost increases to consumers. The average price for a dozen large eggs, for example, has nearly doubled from four years ago, to $2.72 from $1.55. Prices for cereals and bakery products have climbed about 25% over the same period, while fruits and vegetables were up about 14%.
Those increases have largely been driven by the cost of transporting, packaging and processing food products, said David Ortega, a food economist at Michigan State University. “The vast majority of the cost of food is because of things that happen once that food leaves the farm gate.”
As supply chain issues have eased, grocery inflation has returned to levels that more closely resemble the typical rates before the pandemic. That has been good news for consumers, but, Ortega noted, shoppers should not expect to see a significant decline in overall grocery prices any time soon.
“We’re not going to go back to prices that we were used to before COVID,” Ortega said.
But wage growth was now outpacing grocery price increases, he said, pointing to a recent White House analysis that found it took about the same number of hours for the average, non-managerial worker to buy a week’s worth of groceries as it did in 2019. Still, since wage growth did not keep up with food price increases for a while, consumers have been through a “very tough period” and not everyone has seen their wages keep pace.
Where food prices are headed
“We are pretty much back to what you would expect to see food prices doing,” said Omair Sharif, founder of the research firm Inflation Insights.
Where food prices are headed
Several economists said they expected to see grocery inflation remain around current rates in the coming months, barring unforeseen shocks. The Agriculture Department has predicted that prices for “food at home” would rise 1% in 2024, down from 5% last year.
Some categories have seen higher than normal inflation recently, Sharif noted. For instance, beef and veal prices were up 5.1% in the year through June.
But economists have also noted that some products have dropped in price. Ham prices have fallen 4.3% from a year ago. Milk and seafood prices have each declined 1% over the same period.
In the coming months, climate-related disruptions could strain food supply. Meagan Schoenberger, a senior economist at KPMG, said a highly active hurricane season this year had the potential to wipe out entire crops.
“The more disruptions we have, the higher the inflation is going to be for food,” she said.
High food costs continue to pose a political challenge for the Biden administration. On the campaign trail, Vice President Kamala Harris, the Democratic presidential nominee, has acknowledged that prices are too high, vowing to take on price gouging on “Day 1.” In recent months, Biden has accused food and beverage companies of earning excess profits and urged grocery chains to lower costs.
Some food companies have signaled that they plan to slash prices for certain products in response to consumers pulling back on purchases. Last month, PepsiCo executives said they intended to cut prices or offer more sales on certain salty snacks and other products after years of price increases.
Many shoppers remain frustrated, said Christopher B. Barrett, an agricultural economist at Cornell University, as they struggle with broader price increases that strain other parts of their budget.
“Housing costs in particular are up sharply since the start of the pandemic,” Barrett said. “That crimps people’s ability to buy the food they need.”
Jerlyn Heisz, 79, a retired nursing assistant in Platteville, Wisconsin, said her monthly grocery costs had increased to as much as $150, up from about $100 before the pandemic. At the same time, her rent and electricity bills have also increased in recent years.
“I really can’t afford anything beyond the necessities,” she said.
Heisz, who lives on a $1,500 monthly income, said she had noticed that her money did not go as far as it used to, even as she has cut back on buying fresh fruits and vegetables. She said it had been about two years since she last bought a steak.
Still, Heisz, who described herself as a “lifelong Democrat,” said she did not blame Biden for steeper food costs.
“I don’t believe that it’s any one person’s fault,” she said.
