Here's Why Food Costs Keep Rising!
Since the March 2020 lockdown due to COVID-19, a grocery-store-wide surge in food prices occurred. Find out how your grocery bill has changed.
Hey folks, I’ve got some news from the USDA that isn’t good. Turns out, they're predicting that most of our favorite food categories are going yo keep increasing this year. Not just a little bit, but an average of 2.5% across the board. And thats on top of revord increases since the beginning of the pandemic.
Thats on top of already record price upticks. Food & Wine says since the start of the pandemic, grocery prices have increased by a stunning 22-25%.
“Government data shows that higher food prices, for both groceries and restaurant meals, have remained stubbornly high since the pandemic began four years ago, according to Donald Grimes, a regional economics specialist at the University of Michigan.” This marks one of the highest levels in recent history.
Now what we're going to hear is that there are forces at play that are out of the government’s control. But if that’s the case, then we’re dealing with incompetence across continents, because many countries are on the same path. Let’s examine the root causes, versus what we’re told.
Canadian Hit Hard
Of course, I can't list all countries with their food price increases, so I’ll concentrate on North America, starting with Canada.
A poll indicates that nearly two-thirds of Canadians are sick and tired of grocery inflation worsening, with 30% attributing food inflation mainly to grocery stores' efforts to boost profits, 26% to global economic factors, and 20% to the federal government.
Canadian grocery prices have increased by 21.4% over the past three years. This surge is part of a larger trend, even though Canadians are buying less food since the pandemic, according to Druthers.ca. Yet major grocers deny profiting excessively from inflation amidst public and political scrutiny.
A key issue is the dominance of three major companies in the grocery sector, who collectively control almost two-thirds of the market. This concentration of power allows them to set higher prices without fear of losing customers, an issue highlighted in a recent bread price-fixing scandal that demonstrated the potential consequences of limited competition.
Despite claims that increased size would benefit consumers, these companies have seen record profits while food prices continue to rise. The Canadian retail food sector rose from a pre-pandemic 2.4 billion to a record-breaking $6 billion profit in 2023. This surge coincided with another factor—where food prices soared even higher than an upward trending inflation rate, raising justified concerns that some companies have greedily exploited the pandemic to excessively increase their profits. Adding insult to injury, it was revealed that the CEO of Loblaws made $22.1 million in 2023—586 times more than the average cashier.
Canadian consumers may be hitting back, with many shifting their shopping to big box stores, competing national chains, or independent local grocery stores to protest and try to save money.
USA Food Price Uptick
The Heritage Foundation criticized President Biden's handling of rising food prices, arguing that his administration has ignored the issue despite a 30% US food price increase during his presidency. Biden, a millionaire, is said to be so out of touch with common people, that he dismisses concerns by suggesting that people should have enough money to cover these higher costs.
This approach misses the mark for a lot of folks, especially those feeling the pinch as their paychecks don't stretch as far as they used to. With prices going up faster than wages, people are finding themselves needing to dip into credit cards more often just to get by. On average, people are seeing about $50 less in their real take-home pay every week because of these rising costs. That adds up to a whopping $1.1 trillion worth of credit card debt.
The Heritage Foundation thinks President Biden's big-spending ways, messing around with interest rates, and printing lots of money haven't helped much either. It’s all adding fuel to the fire of high living costs and mounting debts for everyday consumers, as well as low-income families.
Why Are Food Prices Rising
We are going to hear a lot of wishy washy excuses for why the price of good is so high, including wage increases, global trade issues, animal and plant disease outbreaks, war, bank interest rates, and paperwork (also called red tape and bureaucracy by some).
If that is how they're going to approach it, then they should kick themselves in the pants because these are signs of being ineffectual, amateurish and unqualified actions.
Because most of these are are default of experts.f
Theyre about as solid as the excuses we hear for gasoline prices.
Is getting down to the nuts and bolts, the root cause is mannade. Shutdowns across the globe, instituted to curb the spread of the manmade Coronavirus, caused disruptions in shipping food from producers to manufacturing facilities to warehouses and supermarkets and restaurants.
Prices first began to surge in April 2020, but the biggest increases came in 2022, as inflation started to erupt and the Federal Reserve tightened monetary policy. These, plus a confluence of other factors, led to the biggest food-price increases in decades.
Here’s a question: Why is food so expensive in the supermarket at the same time as farmers are saying their businesses can’t survive on the prices they are receiving?
This is a question being asked globally,
At the bottom of the value chain is the farmer - the price taker, being told by processors how much they will be paid.
disrupt the production, distribution, and availability of food. Unnecessary pandemic rules, regulation, layoffs and shut-downs led to shortages and higher prices for certain food items.
The pandemic also caused farmers and food producers to face higher expenses for things like labor, fuel, and raw materials; costs that are often passed on to consumers in the form of higher prices for food products.
https://www.nzherald.co.nz/the-country/news/farmers-supermarkets-and-rising-food-prices-dr-jacqueline-rowarth/7DYPMAA3CBDNZA2UHFMVP6JVH4/
Where Are Prices Headed?
Yeah, it looks like North American food prices are definitely on the rise, and it doesn't seem like we'll be seeing them drop anytime soon. According to the USDA's Economic Research Service, food prices jumped pretty good in 2022. Here’s an annual breakdown:
2022 - an increase of 9.9%, marking the fastest increase since 1979.
2023 - The USDA's Economic Research Service states that food prices increased by about 5.8%.
2024 - a bit of a mix but still hefty increases all around, with a prediction interval of up to 3.1 percent. Most consumers don’t buy into that though, thinking that food prices will keep going up over the next year, especially for meat and poultry. And it's not just about what's happening here; globally it’s the same.
So, if you've noticed your grocery bill getting bigger, you're not alone. It's kind of a tough situation, but staying informed and maybe finding ways to save where you can might help.
Yeah, it looks like North American food prices are indeed expected to keep climbing, but maybe not quite as fast as they did in the past couple of years. According to the latest forecasts, we're looking at a slight slowdown in the rate of increase compared to 2022 and 2023. So, while we might still feel the pinch, it's not expected to be as bad as it has been recently. The USDA's Economic Research Service predicts that food prices will increase by about 5.8% in 2023, after jumping by 9.9% in 2022. They're expecting a bit of a mix for 2024, with some food categories seeing a decrease and others an increase, but overall, it's predicted to stay below the 20-year historical average for most food categories. And just to give you a heads up, consumers are pretty much in agreement with these predictions, with most folks thinking that food prices will go up over the next year, estimating an average increase of around 3.7%. So, it sounds like we're all in for a bit of a ride with our grocery bills, but hopefully, it won't be quite as wild as the last few years
Looks like we'll all need to tighten our belts a bit more next year.