Food prices: Why so high?

By Chris Edwards
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The respective prices of eggs, milk and bread have long been used as a barometer of the economic situation and, more recently, as we are in a presidential election year, have also served as a political talking point.

The two presidential candidates of the major parties, Kamala Harris and Donald Trump, are using food prices as an important issue in their election campaigns.

Harris promised Congress to crack down on price gouging in the food and grocery sectors, while Trump attacked her rhetoric, calling the plan “Soviet-style” control.

Regardless of what the candidate says, the rise in food prices in recent years has affected everyone. Economists estimate that consumers, on average, spend about 30% of their annual income on food.

Economic reports show that food prices in the United States rose 11% from 2021 to 2022, the largest annual price increase in more than 40 years.

Figures from the Food and Agriculture Organization of the United Nations (FAO) food price index show a slow increase over the past six months, counter to the trend seen over most of last year, according to a report on the organization's website.

As an example, the FAO report cites the price of orange juice concentrate, which was 42 percent higher in April than a year ago.

According to the FAO, factors that influence food prices worldwide include geopolitical conflicts, extreme weather events, high input costs and increased demand. The COVID-19 pandemic and Russia's invasion of Ukraine are two major events cited as examples of the trend in recent years.

The overall U.S. inflation rate for a 12-month period ended July at 2.9 percent, according to U.S. Labor Department data released last week. The slowdown in inflation has provided some relief to cash-strapped consumers after months of price increases.

According to the Labor Department, prices were 3.4 percent higher this April compared to the same period last year, and the cost of living rose 0.3 percent between March and April. However, increases in rent and gasoline prices during this period were offset by falling food prices, including eggs, milk and bread.

Even though food prices are not controlled by federal authorities, their actions, such as relaxing regulations, can have an indirect impact.

There is no single factor that can explain why food is still more expensive than it was in 2020. However, the combined impact of higher production costs, supply chain disruptions and other types of incidents have meant that many consumers are feeling the pinch on supermarket shelves.

One of the most commonly cited reasons for price increases is beef. At press time, a 5-pound roll of 80/20 ground beef at the Woodville Walmart store cost $19.94, or $3.99 per pound.

This local price is below the national average of $3.95 per pound in 2020 and the current national average of $5.49/pound.

This is an area where cause-and-effect relationships have led to skyrocketing prices across the country. Years of drought and rising feed costs have made raising livestock more expensive, leading many farmers to reduce their herds to cut costs.

As with rising food prices, numerous factors will determine whether these costs fall or not.