Price-conscious Americans might want to pick up extra strawberries and go heavy on the margaritas for the Fourth of July. That would dull the pain of stocking up for the rest of their cookout and even induce nostalgia for the relatively modest inflation in the first year of the Biden administration.
The American Farm Bureau Federation said Monday that beef, chicken and pork prices are almost one-third higher this year than they were on Independence Day 2021. The soaring meat prices are making the Farm Bureau's Independence Day cookout cost 17 percent more than a year ago: $69.68 to feed 10 people, up $10 and rising faster than the consumer price index.
Roger Cryan, the group's chief economist, said meat probably tipped the price scale. Two pounds of beef cost 36 percent more than in 2021, two pounds of boneless, skinless chicken breasts are up 33 percent and three pounds of center cut pork chops are up 31 percent.
The frugal can binge on strawberries, down 16 percent for two pints since last year; sliced cheese, down 13 percent for a pound; and potato chips, down 4 percent for a 16-ounce bag. The 13-ounce bag of chocolate chip cookies for dessert is up 7 percent.
The higher price may not be enough to have consumers seeing stars at their Fourth of July celebrations, but it will be another twist of the inflationary screw.
After spending $5 a gallon on the gasoline to do the shopping, Americans may be relieved to be spending a mere 17 percent more for the rest. But it's still about twice as high as the seasonally unadjusted general inflation rate of 8.6 percent for the 12 months as of May. A year ago, the 12-month inflation rate was running about 5.4 percent.
The Farm Bureau surveys 176 volunteer shoppers among its members stateside and in Puerto Rico to work out the cost for its menu.
“This is something that is not a particularly scientific survey,” Cryan said, but added that it captures a number of factors at play.
“One of them is a general price inflation caused by substantial expansion of the money supply by the Federal Reserve Bank in response to COVID. In addition, there‘s supply chain disruptions that are just a result of the economic recovery and continued demand for physical things and the difficulty of meeting all those demands from the supply chain,” Cryan said in an online briefing.
According to the Bureau of Labor Statistics, the cost of buying food for home use rose 11.9 percent in the 12 months as of May, the largest increase since April 1979. Meat, poultry, fish and egg prices rose 14.2 percent, pushed up by eggs rising 32.2 percent. Other food categories including fruits and vegetables increased by 8.2 percent.
Going out looks like a less expensive option right now. Food costs in settings like restaurants rose 7.4 percent in the 12 months, the largest since 1981, the BLS said. Full-service meals rose 9 percent and limited service meals went up 7.3 percent over the 12 months.
Inflation is President Joe Biden’s top political nemesis. A CBS News/YouGov poll conducted June 22-24 found 75 percent of respondents say the economy is bad and 22 percent rate it as good. The poll found 69 percent of respondents said companies are raising prices to increase profits, but 58 percent also blamed Biden’s economic policies and 41 percent approved of his job performance.
Amazon.com, Dollar General, Target and Walmart executives said in earnings calls in April and May that food shoppers are becoming more intentional in their buying with fewer impulse buys and some shifts to buying store brands that are generally cheaper than national brands.
Cryan also noted the Russian war in Ukraine is contributing to inflation by disrupting food crop exports from the two countries to parts of the world that relied heavily on them. The war also has reduced exports of fertilizer and fuel, resulting in higher input costs for U.S. farmers and other producers around the world.
“It is causing cascading effects through the agricultural supply chain,” he said. “This is a very striking demonstration of how fragile the system can be and how important it is not to take our food supply for granted.”
He also said the higher food prices in grocery stores are not a bonanza for farmers and ranchers.
“These higher prices that many ag commodities are getting right now are not a windfall for farmers and ranchers because of those higher input costs that they are facing are really cutting into their bottom lines. In many cases, the farmer’s input costs are rising much more than they are increasing their returns for their commodities,” he said.
Cryan said he expects an inflation rate between 5 percent and 9 percent for the next two years as the Federal Reserve takes steps to reverse the long period of loose policy.