DAYTON, Ohio (WDTN) – Have you recently felt like your grocery bill was getting more expensive? You aren’t imagining it.
The Bureau of Labor Statistics’ Consumer Price Index indicates that it costs three percent more to buy groceries now than it did this time in 2020 — a deviation, Steve Reed, an economist for the Consumer Price Index, said is abnormal for just a year’s time.
“In the recent decade, it’s higher than we typically see,” he said. “Food inflation has really been quite flat [trending] a little bit positive but not very high for the past, really, 10 or 15 years for the most part.”
Dr. John LeBlanc, associate professor of management at Cedarville University said there is one primary reason for the rise in prices.
“It starts with fuel costs,” LeBlanc said. “[When] fuel costs rise, they have to pass it along. When they pass it along, everything else goes up — so your cost to feed the animals, the cost to process the animals, the cost to truck the produce and the goods and services.”
The price of gas, he said, is the direct result of an increase in demand compared to the start of the pandemic. The production has not caught up to meet the need. However, experts say there are other supply chain issues that are playing a factor in the abnormally high prices as well.
“The economy [is] strong and people are pretty much on a buying binge this year,” said Dr. Michael Gorman, business professor at the University of Dayton. “On the other hand, there are labor shortages which make it hard to build supply. Many supply chains that were shut down last year are having a hard time starting up. For example, there are lots of bottlenecks, meaning places where stuff gets caught up during delivery.”
But overall inflation in the market is also driving the price of groceries and household items.
“The expansionary fiscal and monetary policies along with exceptionally well performing stock market all have contributed to the general inflation in the economy,” said Dr. Mingming Pan, associate professor of economics at Wright State University. “In this context, there is upward pressure on wage rates, which pushes up production cost.”
LeBlanc gave a real world example of how a grocery item like poultry has increased since the start of the pandemic.
“The price of the feed to feed the chicken goes up because they have less availabily, and of course, the cost to get it to [the chicken farmer] has gone up. The price to process the chickens [has] gone up because there’s less people to be able to do it. And so they’re paying more, getting less, so there’s [less] productivity in the process. The price to get it from the producer to the market has gone up because truckers are going to haul the best commodity at the highest rate.”
Reed said beef is one item that has seen a significant increase in price, adding, “Beef prices are up 1.7 percent in the last month alone. And they’re up more than 12 percent over the previous year.” And while inflation overall has finally started to slow more than a year into the pandemic, experts say they don’t foresee the price of groceries decreasing significantly in the near future.
“I think we are facing a short-term spike in prices, but I don’t think prices will continue to spike nor will they fall again,” said Gorman. “But, that’s very hard to predict.”
Pan added, she believes the state of the economy will also depend on the course of the pandemic. And when it comes predicting your holiday grocery bill, she said, “I would not think holidays will contribute to much further inflation in grocery, as grocery is daily essential consumption. Holiday gifts would be a different story, though.”