If you’ve noticed the total cost at the bottom of your grocery store receipt creeping up over the past few months, you’re not alone. A pair of respected indices show that the prices of staple food commodities and groceries are rising at dramatic rates, suggesting that consumers should prepare to dedicate more of their budget to groceries in the coming months.
How Much More Expensive Are We Talking Here?
The monthly consumer price index, released last Tuesday by the Bureau of Labor Statistics, shows that food prices have risen by 3.5 percent over the past year. That’s well ahead of the 2.6 percent increase in prices across all of the categories the CPI measures.
The USDA has a breakdown of how prices in those different categories have changed. Between March 2020 and March 2021, the price of meat rose by 5.8 percent, poultry 4.4 percent, and fish and seafood 5.2 percent. Eggs are 4.7 percent more expensive than they were a year ago, and the price of dairy products has gone up by 1.6 percent.
Fruits and veggies now cost 3.8 percent more, on average, than they did last March. Nonalcoholic beverage prices are up 3.2 percent, and cereals and baker products are 2.6 percent more expensive than they were a year ago.
Why Are Grocery Costs Rising?
Behind these increases in the prices people are paying at the store, are increases in the prices of key farm products. The Bloomberg Agriculture Spot Index, which tracks the prices of grains like corn and soybeans, softs like coffee and orange juice, and livestock like cattle and hogs, had its biggest surge in almost nine years last week. And experts say these prices are likely to keep rising.
“The indications are that there is very little reason to believe prices would remain at these levels. It’s more likely they will rise further. Hardship is still ahead.” said Abdolreza Abbassian, senior economist at the United Nations’ Food and Agriculture Organization.
Perhaps unsurprisingly, the Biden administration has a sunnier outlook for American consumers. Three of its economic advisors wrote that they “think the likeliest outlook over the next several months is for inflation to rise modestly” before falling back to a slower pace as the disruptions of the pandemic, from pent-up demand to supply chain issues.
As it stands, increasing food prices will increase food insecurity for poorer households, who spend a higher percentage of their income on groceries. And if the rate of inflation of food prices does not slow down as Biden’s economists predicted, it could cut into the gains his other policies are making in the fights against poverty and inequality.