A dollar doesn’t go as far as it used to – and if you don’t believe it, go to a supermarket.
The numbers show that food prices have been nibbling on household budgets and fattening food bills since the advent of COVID-19.
After stocking up the buyer Business was cleared in spring 2020According to experts, the resulting price increases are another example of the far-reaching distortion of supply and demand caused by the global pandemic.
The numbers tell the story.
Average monthly food costs rose 3.3% in March from March 2020, according to the Bureau of Labor Statistics. In every month since April 2020, the price increase has been between 3% and 5% compared to the same point in the previous year.
In 2019 and the beginning of 2020, the percentage increase was around 1% according to the figures.
Likewise, the average price of all grocery purchases in the grocery store rose 5.7% over the same period at the end of April 2020, according to NielsenIQ, a market research company.
For example, the “average unit price” of meat (which could sum up items such as sirloin steak and chicken legs) was $ 4.06. That is an increase of 8.6% compared to the same time last year, according to the statistics.
“No question about it,” said Phil Lempert, a food industry expert who founded SupermarketGuru.com. “I spend more on groceries.” He is not alone.
The pandemic effect
COVID-19 has brought new problems and costs into a supply chain that urgently need to be fixed, he explained.
For example, labor shortages and social distancing rules increase labor costs in the meat packaging industry, he said. Rising gas prices make truck driving more expensive and logistics are made even more difficult more retired truckers, Lempert noticed. Meanwhile, Chinese demand for corn and soybeans are driving those prices up, he said.
It’s also based on new customer expectations for shopping during a pandemic, and all of those plexiglass partitions, hand sanitizing stations, and cleaning supplies to wipe down scanners and carts cost money.
“Someone has to pay for it,” said Lempert.
Of course, there are supply chain challenges and additional costs to address those challenges, said Greg Portell, a leading partner in global consumer practice at Kearney, a strategy and management consultancy.
Food manufacturers are all in the same boat. “That makes it easier for these companies to pass on to consumers,” added Lempert.
The stimulus effect
But there’s also the demand side, he said, which is boosted by government spending on measures like stimulus checks. “They have real dollars in people’s pockets,” observed Portell.
Jim Dudlicek, director of communications and external relations at the National Grocers Association, a trade association, said food prices have risen for a number of reasons, including gas costs, consumer demand and “pressure on the supply chain.”
Nonetheless, he added: “As manufacturers and supply chain costs rise, our members are following the same pricing structures and guidelines as always and are trying to keep price increases out for as long as possible.”
2020 was actually a strong year for grocery stores as so many people stayed home and spent more of their grocery budget on eating at home instead of going to restaurants. The turnover last year was “unprecedented, ”According to Bank of America
BAC + 1.50%
But as restaurants feed more people eager to get out of the house As vaccination rates rise, grocery stores are facing new challenges when it comes to retaining customers.
Are the prices staying high?
“The next 12 to 18 months will be a wild west,” said Lempert, “because we don’t know what the future will bring.” For example, grocery stores, supermarkets, and suppliers need to figure out how to seduce shoppers with promotions – but that takes months of planning and security, Lempert says.
In Lempert’s view, rising prices are not the new normal. Prices should fall after suppliers in the food industry invest in better and safer ways to get food on shelves, he said.
Jared Bernstein and Ernie Tedeschi, members of President Joe Biden’s Council of Economic Advisors, wrote in April that they generally believe that “measured inflation will rise somewhat over the next few months”.
you quoted “Disruptions in the supply chain and pent-up demand, especially for services. We believe that these three factors are likely to be temporary and that their effects will wear off over time as the economy recovers from the pandemic. “
For now, however, price hikes can hurt families who are still affected by the pandemic.
A little more than 8% of households stated that they sometimes or often did not have enough to eat in the past week. This emerges from data collected for an ongoing census survey in mid to late April. In January, 11% of households said they were suffering from the same type of food shortage.
Late last week, the Biden government announced it would expand a program to feed school children during the summer. According to the. Feed up to 34 million children Associated Press.
The funding comes from funds earmarked for food aid in March under the US $ 1.9 trillion rescue plan. The bailout provides $ 12 billion for anti-hunger programs Center for budget and political priorities.