Prices for common elements of the U.S. diet, from poultry and dairy to fruits and vegetables, are rising at double or triple their usual rate, said the government in forecasting the highest annual food inflation rate in 14 years. The Agriculture Department said food prices would rise an average of 5% this year, an abrupt two-point increase from its forecast a month ago.
It would be the highest food inflation rate since 5.5% in 2008, when higher oil prices combined with lower-than-expected global grain harvests, a weaker dollar and panic buying, particularly for rice, made international commodity prices more volatile.
The USDA says it raised its estimate following two months of prices surges “across many of the food categories.”
“The impacts of the conflict in Ukraine and the recent increases in interest rates by the Federal Reserve are expected to put upward and downward pressures on food prices, respectively,” said the Economic Research Service in its monthly Food Price Outlook.
“An ongoing outbreak of highly pathogenic avian influenza could contribute to poultry and egg price increases through reduced supply or decrease prices through lowered international demand for U.S. poultry products or eggs.” All three factors — war, interest rates and bird flu — will be monitored for their impact on food, said the USDA agency.
“Retail poultry prices have been high with historically low stocks of frozen chicken,” said the USDA. It said poultry prices would rise 6.5% this year, nearly triple the usual 2.3%. Dairy product prices were forecast to rise 4.5% at the grocery store, double the long-term average of 1.7% a year. Fruit and vegetable prices will rise 4% this year, twice the long-term average, while fats and oils would rise 6.5%, compared to their usual 2.3%. Those four categories account for one-third of grocery expenditures, according to USDA data.
Rapid increases in consumption of dairy products have driven up retail prices, said the USDA.
The cost of living is now the top issue for Americans, jumping ahead of jobs and the economy, voting rights and the pandemic, according to an NBC News poll. Six in 10 respondents to the survey said their family income was falling behind the cost of living, while 31% said they were staying even. Six percent said their income was rising faster than inflation.
When asked what was behind rising prices, 38% said President Biden’s policies, 28% said the pandemic and 23% said corporate price increases. Biden’s overall approval rating fell to 40%, its lowest yet, said NBC News.