Rising grocery prices stretching budgets
The cost of groceries has been rising at the fastest pace in decades since the coronavirus pandemic seized the U.S. economy, leading to sticker shock for basic staples like beef and eggs and forcing struggling households to rethink how to put enough food on the table.
Long-standing supply chains for everyday grocery items have been upended as the pandemic sickened scores of workers, forced factory closures and punctured the carefully calibrated networks that brought food from farms to store shelves. Even while some of the sharpest price hikes have eased somewhat, the overall effects are being felt most acutely by the nearly 30 million Americans who saw their $600 enhanced unemployment benefit expire Friday — exacerbating concerns that the recession’s long tail could worsen food insecurity for years to come.
Earlier in the pandemic, the shock to the food system collided with staggering layoffs and an economy forced into lockdown. Cars filled parking lots to wait at drive-thru pantries. From the beginning of March through the end of June, food banks across the country distributed more than 1.9 billion meals, according to Feeding America. In March alone, food banks gave out 20 percent more food than an average month.
Sean Valadez, 35, of the greater Los Angeles area, came home from Costco in mid-March with a $600 receipt, hoping his grocery haul would feed his family for up to 45 days after he lost work in the music and live entertainment industry. When he went back to the store 40 days later, Valadez was stunned by the rise in prices for ground beef, chicken, salmon and eggs. The grocery bill was an eye-popping $1,000, not including the alcohol he also purchased.
Valadez said he didn’t remove anything from his cart “because it was shameful.” He swiped his credit card, went home to his partner, and told her they would have to make a serious change. Their unemployment benefits just wouldn’t cover such high grocery bills.
“I left the United States to be able to afford groceries,” said Valadez, who brought his family to stay with his mother-in-law in Mexico, although he maintains his California home. “Food prices are what’s keeping us here.”
Overall inflation has not been a pressing concern since the recession touched down in February. Last week, Federal Reserve Chairman Jerome Powell said consumer prices have been kept in check due to weak demand, especially in sectors like travel and hospitality that have been most affected by the pandemic. But food prices are the exception.
“For some goods, including food, supply constraints have led to notably higher prices, adding to the burden for those struggling with lost income,” Powell noted.
Indeed, nearly every category of food become more expensive at some point since February, according to data released Friday by the Bureau of Economic Analysis. Beef and veal prices saw the steepest spike (20.2 percent), followed by eggs (10.4 percent), poultry (8.6 percent) and pork (8.5 percent).
Compared to this time last year, prices for beef and veal are up 25.1 percent. Eggs are up 12.1 percent, and pork is up 11.8 percent from a year earlier, according to seasonally adjusted BEA data.
For many staples, the price hikes were most severe earlier in the spring and summer when ruptured supply chains clashed with a surge in consumer demand. Some categories, like eggs, have seen prices fall back down as the supply strain wore off and shoppers stopped hoarding so much. Milk prices have actually dipped below pre-pandemic levels.
Regardless, the grocery system was strapped by a common theme: Supply chains are hard-wired and can’t quickly bend around a global pandemic. Plus, the labor, transportation and warehousing networks that keep restaurant or school kitchens stocked aren’t the same networks that prop up supermarkets.
“These supply chains are not as fungible as people think,” said Jayson Lusk, head of the Department of Agricultural Economics at Purdue University. “You have a farmer who has a relationship with a supplier that has a relationship with a restaurant, and when those restaurants decide not to open, it’s really practical things like, ‘Who do I call? I don’t have those contacts and relationships.’ ”