Food prices are still high, but a bit of relief may be around the corner.
During the 12 months ending in June, food prices rose 10.4%, the largest annual increase since February 1981, the Bureau of Labor Statistics reported on Wednesday.
Food prices rose 12.2% in the year ending in June, and that’s not even adjusted for seasonal changes. In that time, almost every item in every category got more expensive, with some increases more dramatic than others. Eggs increased by 33.1%, flour went up 19.2% and chicken prices rose 18.6%. Milk prices increased by 16.4%, while fruit and vegetables went up by 8.1%.
In that time period, restaurant menu prices increased 7.7%.
Increasing prices are on the rise this year and in June of this year inflation jumped to a new pandemic-era peak, with US consumer prices increasing by 9.1% over the year. This sharp rise in June is largely due to a jump in gasoline prices, which are up by a substantial margin year-over-year. Last month, gas prices in the United States reached record highs, topping $5 a gallon.
In the food sector, an “unfolding avalanche of problems” has led to higher prices, according to Rob Fox, a senior member of the knowledge exchange division at CoBank, which provides financial services to agribusinesses.
To name a few: A tight milk supply, combined with a slew of other problems, has driven dairy prices up. The avian flu is driving up the price of eggs. Commodities such as wheat and corn were driven up by bad weather and the war in Ukraine. Adding to that higher wages and packaging costs, you end up with extremely high food prices.
Flour prices have increased by 5.3%. Prices of butter have increased by 4.8% and those of margarine have gone up by 6.8%.
Fresh biscuits, rolls and muffins popped 3.5%, while fresh-baked cakes and cupcakes rose 2.9%. Shoppers looking to satisfy their sweet tooth had to pay more in the frozen aisle, too — recently, frozen and refrigerated bakery goods have become 2.9% more expensive, and ice cream has gotten 4% more expensive. The price of sugar has risen 2.1%.
But there was some relief at the checkout counter, especially in the meat department. Beef and veal prices fell 2.3%, pork dropped 1.6% and bacon went down 1.9%. However, hot dogs were an outlier, increasing by 4.5%.
In the fresh produce section, citrus fruits took a 4.5% dip.
What happens next ?
However, there are signs that prices may begin to fall. “My prediction is that we are right now at peak inflation at the consumer level,” Fox said. That’s partly because food producers’ input costs peaked earlier this year and have since declined, he said.
For example, consumers may choose to only buy goods on discount or opt for cheaper options when they’re available, resulting in reduced demand and less expensive prices.
In a preliminary survey released last month by the University of Michigan, consumer sentiment fell to a record low between May and June, suggesting that some consumers may begin to change their spending habits.
Despite his prediction, Fox said that price declines may not occur right away, and that it could take months or even years. Regardless, he does not anticipate that prices will drop below what they were at this time last year.
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