Over the last 12 months, grocery prices soared 13.1% — the largest annual increase since the year ending in March 1979, the Bureau of Labor Statistics said Wednesday.
The prices of nearly every grocery item have ballooned over the past year.
The cost of eggs has soared 38%, and prices for other goods have also jumped: Flour is up 22.7%, chicken 17.6%, milk 15.6%, ground beef 9.7% and bacon 9.2%. Fruits and vegetables got 9.3% more expensive.
While commodity prices are falling, it will take time before those lower costs pass through to consumers. Plus, plenty of other costs for producers — such as fuel, labor and packaging — have also been high.
And as supply has been disrupted, demand has grown.
Demand for groceries grows
Penegor added that about 82% of meals were eaten at home pre-pandemic, but that figure jumped three percentage points since then and has stayed there.
“The consumer has been a little more strapped, so there’s a few more meals prepared at home,” Penegor said. “Inflation has been high, so net disposable income has been a little bit pinched.”
Restaurants have also been raising prices, but at a slower clip: In the 12-month period through July, menu prices rose 7.6%, less than overall inflation.
Plus, food prices are largely unaffected by current government efforts to curtail spiraling costs.
The Fed believes that “food and energy are influenced by global commodity prices in a way that tells them, ‘Hey, these items aren’t really directly under your control,'” noted Michael Gapen, head of US economics at Bank of America Global Research.
Essentially, the thinking is this: Because the US can’t control international factors such as the war in Ukraine and higher shipping costs, it can’t fully control domestic food prices.
“There’s no ability for the government to release extra stalks of wheat and corn and cheese and so on,” Fox said.
What got more expensive in June
The result has been steadily higher prices in the grocery aisle, with some items seeing larger month over month spikes than others.
In July, adjusted for seasonal swings, egg prices popped 4.3% compared to June. Coffee and peanut butter each got 3.5% more expensive. Flour rose 3.2% and bread prices went up 2.8%. Cheese jumped 2%, while chicken got 1.4% pricier.
There was some relief, however. Citrus fell 3.2%, and whole milk dropped 1.4%. Uncooked beef roasts fell 1.3%, and uncooked steaks fell 1.1%. Ham got 1% cheaper.
The biggest decline was in hot dog prices, which dropped 6.1%.