The USDA Economic Research Service (ERS) says food prices have increased nearly 9 percent between January and July this year compared to 1.9 percent over the same period last year and 3.1 percent in 2020. The 20-year average over the same 7-month period is 1.7 percent. The latest figures from the Bureau of Labor Statistics show prices for food-at-home rose 13.1 percent over the past 12 months while prices for food-away-from-home are 7.6 percent higher.
Prices are higher across all categories of food. Figure 1 shows the changes in prices in 13 categories between January and July this year compared to 2021. All 13 food categories have seen faster price increases so far this year. Prices for eggs (20.9 percent), fats and oils (13.4 percent), and poultry (11.8 percent) have risen the most. Eggs and poultry prices are higher in part because of an outbreak of highly pathogenic avian influenza (HPAI). Consumers may also be substituting lower-priced poultry for higher-priced beef and pork in their grocery carts pushing poultry prices higher. Global shortages of vegetable oils due to Russia’s invasion of Ukraine (Ukraine is the largest exporter of sunflower oil), production problems elsewhere in the world, and competition from renewable diesel are contributing to the higher prices for oils.
Figure 1. Food Price Inflation, January-July, 2021 & 2022
Several factors are contributing to the inflation in food prices. Higher fuel and energy costs, supply chain disruptions, labor shortages, higher wages, and international conflicts are all factors. Higher commodity and livestock prices also play a role, but according to the ERS, farm production equals just 8 cents of every dollar spent on food. The ERS projects food-at-home prices will finish the year 10-11 percent higher. It also projects prices will moderate to 2-3 percent in 2023, a rosy outlook given the factors underlying the price increases. suggest consumers are responding to the higher prices by spending less, shopping for discounts, or substituting goods with less expensive items. Producers could eventually see the trickle-down impacts of the purchasing changes in the demand for livestock and commodities.