Food Inflation—What’s It Mean for Ag Producers
Figures from the U.S. Bureau of Labor Statistics released last week shows the overall Consumer Price Index (CPI) in the U.S. is up 9.1 percent over the preceding 12 months. Prices for energy, shelter, and food are the primary culprits. The gasoline index is up nearly 60 percent; electricity, up 13.7 percent; and energy in general, up 41.6 percent. The overall food index is 10.4 percent higher, led by increases in prices for food consumed at home which are up 12.2 percent, the largest increase since April 1979 (Figure 1).
Prices for food are higher across the board. Cereals and bakery products are up 13.8 percent over last year; dairy and related products, up 13.5 percent; fruits and vegetables, up 8.1 percent; and meat, poultry, and fish prices are up 11.7 percent. Increases in pork and poultry are contributing the most to the increases in meat prices, up 9.0 and 17.3 percent, respectively. Prices for beef and veal are up too, 4.1 percent, but interestingly they have declined since March.
Figure 2. Food Inflation, Year-Over-Year Changes

There are several reasons why increases in food prices have outpaced the overall CPI. Higher commodity prices this year are one. Commodity prices, particularly wheat, are higher. Surging fuel costs, rising wages, and other increased costs up and down the supply chain have compounded the cost of stocking food shelves. Plus, the fear of global food shortages resulting from Russia’s invasion of Ukraine has pushed food prices higher relative to other goods.
Food price inflation can affect agricultural producers by impacting demand for commodities and livestock products. Changes in purchasing habits by consumers due to inflation will ultimately affect the demand for farm and ranch production. The Center for Food Demand Analysis and Sustainability at Purdue University surveys Americans monthly to track trends and changes in consumer food demand. The responses to the Center’s latest survey suggest food at home expenditures are steady or falling, an indication consumers are changing their purchasing habits in response to higher prices. The Daily Livestock Report published by Steiner Consulting reports consumers are shifting down to less expensive food products. Prices for higher-priced cuts of meat (i.e., steaks or pork chops) are softening, while at the same time prices for lower-priced products (hamburger and hot dogs) are increasing.
It appears food price inflation has crossed a threshold where consumers are starting to adjust their purchasing habits in response. For Nebraska producers, these purchasing adjustments bear watching as they can have implications for the demand and prices for their production.