In the year ended March, non-seasonally adjusted food prices rose 8.8% — the largest 12-month rise since the year ended May 1981, the Bureau of Labor Statistics reported Tuesday.
In the past year, almost all groceries have become more expensive.
Groceries have become 10% more expensive overall. Flour was up 14.2%, milk was up 13.3%, eggs were up 11.2% and fruits and vegetables were up 8.5%. Bacon rose 18.2%.
A number of factors have tightened food supply in several categories as demand remained strong, causing prices to soar across the board.
One problem is the environment. Droughts in Brazil, the United States and Canada impacted crops ranging from coffee to soybeans to wheat, he said William Osnato, senior research analyst at Gro Intelligence, an agricultural data analytics company. The war in Ukraine has disrupted the wheat market and pushed up prices. In addition, supply problems are also affecting the global vegetable oil market. A deadly bird flu is reducing egg supply and driving up wholesale egg prices, as well as threatening consumer prices.
It will take a while for prices to drop again, Osnato noted.
“We’re not going to get rid of that with a good US crop,” he said. “It won’t solve anything. We will be in a high food price environment for more than a year.”
buttery bits
Not every single food has become more expensive in the last month. But several did.
Many durable goods saw big jumps from February to March, according to seasonally adjusted data from the BLS. The price of canned vegetables rose 4.2%, while the dried beans, peas and lentils category rose 4.4%. Rice rose 3.2% and crackers and bread rose 2.7%.
Fresh staples also became more expensive. Uncooked ground beef rose 2.1%. Milk grew by 1.3%. Fresh vegetables grew 2.6%.
But the biggest jump? butter, with a 6% increase.
“Global milk supply has shrunk significantly over the last six months,” said Rob Fox, director of knowledge sharing at CoBank, which provides financial services to the agribusiness.
In the United States, “Milk production forecast for 2022 is 226.0 billion pounds, down 1.2 billion from last month’s forecast and a projected decline of 0.3 billion pounds from 2021,” according to the USDA’s Milk Outlook released last month . “This would be the first year-on-year drop in milk production since 2009.”
But why is butter up 6% in March while milk is up just 1.3%?
Fox explained that when milk supplies run low and demand for milk increases or is constant, butter is the first thing affected. That’s because it’s a relatively small part of the dairy market. “There can be significant price volatility,” Fox said, noting that spikes in the price of butter could mean other dairy products could also become more expensive.
Some items have become cheaper in the last month. Donut prices fell 1.7%, peanut butter prices fell 1.5% and ham prices fell 1.2%.