The average price of groceries in the United States has soared due to high inflation and shortages among the top ten food items in the past 12 months to May 2022, according to a sales report from the June 28 from NielsenIQ.
U.S. consumers are feeling the pain and spending more and more of their income on many food staples as prices ‘overtake those inflationary measures’“says the report.
“The effects of high and sustained inflation are much more pernicious than unemployment in the sense that high prices affect more people,” noted Mark Hamrick, senior economic analyst at Bankrate.
“The cost of commodities is increasingly out of reach for many.”
Inflation costs the average American $460 more per month, according to Ryan Sweet, senior director of economic research at Moody’s Analytics.
The US Bureau of Labor Statistics (BLS) Consumer Price Index (CPI) for June 10, which tracks the change in prices paid by consumers for goods and services, rose by a record 8, 6% over the past 12 months to June, the highest price increase since November 1981.
Grocery store prices rose 0.7% in May from April, up 7.4% from the same month last year.
The peak of inflation has not yet been reached
The CPI has risen 1% overall since April, a strong indicator that the peak of inflation has yet to hit the United States.
Average unit prices for beef and chicken have risen 12.5% to $6.77 and 11.0% to $2.98, respectively, over the past 12 months.
The average price of popular meat products rose by double digits, with the price of pork following a similar trajectory to beef and chicken, rising 12.1% to an average unit price of $3.33.
“Meatmakers like Tyson Foods attribute the spike in costs to a combination of stronger consumer demand, rising fuel and labor costs, and rising food costs for livestock,” the report said.
Nielsen reported that the average milk unit price has reached record highs since March, up 8% in the past 12 months ending in May and nearly a dollar higher than two years ago, according to Bankrate.
The CPI index for total dairy and related products rose 11.8%, the largest annual increase since April 2008.
The price of eggs soared nearly 20% in the same period due to an outbreak of bird flu, according to Nielsen, while Bankrate said a carton of eggs rose nearly $1.50 .
Meanwhile, gasoline prices in June hit their highest ever price per gallon, which had climbed since last year, up 49.5%.
The average price of a gallon of unleaded gasoline in January was $3.41, nearly a dollar higher than in February 2020, according to the BLS.
While the Biden administration has singled out Russia for rising fuel prices, the conflict in Ukraine is only responsible for the 15% rise in oil prices, according to the US Energy Information Administration.
The mysterious destruction of several large poultry farms in recent months was not mentioned in the report.
Despite the increase in the overall cost of food during this period, unit sales for each of these top-selling grocery categories recorded declines of 2 to 7%, with the exception of chocolate, which posted a increase of 1.2%, and toilet paper, which increased. 4.6 percent.
Soft drinks posted the biggest gains at 14.1% to $3.22, while the price of bottled water rose 9.4% to $2.88.
The average coffee price rose 7.6% to $8.62 per unit.
According to a report by the Food Industry Association, FMI, more and more consumers are turning to store brands, with 41% of shoppers buying more and more store-label products, 77% planning to buy these labels in the future,
Nielsen said an average grocery cart containing all ten listed items alone could cost consumers nearly $4 more than the same time last year.
As long as inflation trends continue, the report expects consumers to spend more on groceries while decreasing spending on other out-of-home expenses.
Last month, former Treasury Secretary Larry Summers released a co-authored report warning of long-term inflation trends and how the federal government is underestimating actual inflation rates.
Summers and his colleagues have criticized changes to the way the government measures inflation in the CPI index since the late 1970s, which may have led the Federal Reserve to underestimate the current extent of the inflation. problem, thus strongly affecting inflation rate policy decisions.
In 1983, the Bureau of Labor Statistics removed ownership costs from the CPI measures and replaced them with a measure called equivalent owners’ rent, but this may have skewed the analysis of the direct effect of mortgage rates and therefore of interest rate policy, on the calculation of the rate of inflation.
The document also adds that the CPI is made up of goods whose prices are less volatile than in previous decades, such as food and clothing, while more segments of the index come from sectors of the economy such as than electronics, which are less sensitive to sudden price changes.
Summers concluded that reducing inflation will now require a longer and more sustained effort and that it will not happen quickly or easily.
He suggested interest rates may need to be raised to levels not seen since the Fed’s Paul Volcker era of 1979-1987, when interest rates rose as high as 20% before inflation unchecked, which many believe would cause a major recession and hardship for millions of Americans.