Most consumers know that food prices are going up. But industry experts say the reason why they’re going up is a bit more complicated.
Food industry supply chain executives gathered this week at a virtual forum hosted by the Heritage Foundation. Officials from the North American Meat Institute, the Consumer Brands Association, and the Food Industry Association were all present.
Speakers from the organizations offered various reasons for why food costs have spiked, rising 10% in May. They pointed to higher fuel prices, which in turn increased transportation costs. They also say the industry faces higher labor costs and ongoing supply chain bottlenecks.
“I think the broader question is ‘What is not contributing to higher food prices?’” said Jennifer Hatcher, chief public policy officer in government relations at the Food Industry Association.
Mark Dopp, chief counsel at the North American Meat Institute, says meat prices have risen sharply in the face of a surprising level of continued demand. He characterized some of it as “panic buying.” Dopp said producers simply can’t meet the demand for meat, and inflation-battered consumers haven’t reduced their spending.
After gasoline, food costs have been among the biggest drivers of inflation this year. However, there is some good news. Just like gasoline, some experts believe food inflation may have peaked for a while.
However, even if prices level off, they are still very expensive. Economists will get a peek at the latest numbers next week when the Labor Department issues its Consumer Price Index (CPI) for June.
Fish, meat, poultry, and eggs are leading costs higher
In May, the cost of food prepared and consumed at home rose faster than food at restaurants. The cost of fish, poultry, meats, and eggs rose the fastest, increasing by 14.1%.
Even if the data shows that prices slowed their increase in June, Mark Welch, grain marketing economist with Texas A&M AgriLife Extension, says it’s impossible to decouple food prices from the cost of energy.
“When you see the price of energy go up, you are going to see the price of a lot of things go up,” Welch told The Daily Signal. “That applies at the grocery store, at the restaurant. Food prices are very sensitive to the price of energy so it is an effort of a lot of these factors that have contributed to creating the type of situation we are in today.”