The months-long rise in food prices has finally shown signs of cooling.
Inflation hit 7.7% in October compared to a year ago, down from 8.2% in September, the government said Thursday. Food prices rose 10.9% year-over-year. Food at home — grocery store or supermarket purchases — increased by 12.4%, ticking down from 13% in September, and rose 0.4% on the month, the smallest monthly increase in the category since last December.
The rise in the cost of living showed some relief from last summer, but several categories rose far more than the overall rate of inflation. Egg prices rose 43% year-over-year in October, butter increased by 26.7%, and flour and prepared flour mixes were up 24.6%. Lettuce prices rose 17.7% year-over-year, while bread and milk prices rose by 14.8% and 14%, respectively.
“Egg prices rose 43% year-over-year in October, butter increased by 26.7%, and flour and prepared flour mixes were up 24.6%. ”
About those egg prices: In addition to an increase in operational costs, the avian flu outbreak, which started around six months ago, has cut the egg-laying industry’s production capacity by about 10%, J.T. Dean, president of Versova Management and Center Fresh Group, a major egg producer that manages multiple farms across four states, including Ohio and Iowa, told MarketWatch.
Monthly price movements were also eclectic: Fruits and vegetables saw a 0.9% decrease in prices from September to October, while the category for meats, poultry, fish and eggs rose 0.6%. Cereals and bakery goods also saw an increase of 0.8% in the month, as hot weather, the pandemic and political events took their toll on the supply of certain ingredients.
Food insecurity among low-income Americans has risen over the past year. “Approximately one in five adults reported experiencing household food insecurity in both spring 2020 and again in summer 2022, after a decline in reported food insecurity in spring 2021,” this survey from the Urban Institute, a progressive think tank, concluded.
What’s behind the rise in food prices?
The rise in food prices is due to a combination of several major factors, and there are few short-term solutions, experts said. Food producers in the U.S. are dealing with the aftermath of the coronavirus pandemic and supply-chain disruptions from Russia’s war in Ukraine. Extreme heat and hurricanes have also affected agricultural production — from lettuce in California to citrus in Florida.
Labor costs remain high for many labor-intensive food products such as ham and fruit. For most fruit growers, labor is 60% or more of their production costs, said Jon DeVaney, president of the Washington State Tree Fruit Association. A declining population of immigrant workers, and a persistent labor shortage since the pandemic have made it harder to keep costs down, he said.
“Food producers are dealing with the aftermath of the pandemic, disruptions from Russia’s war in Ukraine, and extreme heat.”
The results of the midterm elections will also play a role in negotiations by lawmakers next year on nutrition aid and food subsidies, experts told MarketWatch. The farm bill, which covers everything from agricultural production to food stamps, is designed in part to help low-income Americans. Poorer households spend a greater percentage of their income on food and shelter.
The current version of the farm bill, the Agriculture Improvement Act of 2018, expires in September 2023. The largest budget in the farm bill is allocated to nutrition programs, in particular the Supplemental Nutrition Assistance Program (SNAP). Formerly known as the food stamp program, SNAP aims to help lower-income households afford to eat.
The rise in food and energy prices over the last year has led some Americans to change their eating habits — buying less meat, and switching to cheaper grocery stores, as well as cutting back on eating out. Cash-strapped families are increasingly searching for discounts and deals, including buying near-expired food that’s marked down in price.
