Food prices are continuing to rise. The most recent Consumer Price Index in February shows food prices rose 7.9 percent during the month. Scott Brown is an Associate Professor of Agricultural and Applied Economics at the University of Missouri Extension Service. He says several factors are pushing prices higher.
”That’s been a combination of factors that’s been driving us to higher CPI for food. I will say higher prices for things like cattle, hogs, milk products, we can look at things like fats and oils as well, so, there are some farm level increases in prices, but we have to remind ourselves that things like energy costs, labor costs, have all been going up. That adds costs from the farm gate to the retail that, in some cases, are more important than what’s been happening at the farm level in terms of where we sit with the CPI for food.”
There’s no doubt the war in Ukraine is pressuring food prices.
“As energy prices have moved higher as crude oil prices, at least for some time, have been over $100 a barrel. It has added costs from the farm level to the retail level. We have to get those products from the farm level, from the processor, all the way to the ultimate consumer, and I think that’s added a lot of inflation in terms of what we’re seeing on food prices. Beyond that, we can talk about higher wheat prices, so that’s directly in things like what the loaf of bread costs but, longer-term, could continue to ramp up higher feed costs for livestock producers and make meat prices higher. On top of that, Ukraine is important in terms of being a big producer of global sunflower oil. When you look at the fats and oils component of the CPI for food in February, it was 11.7 percent above year-ago levels. That certainly has had some impact.”
He says the rise in food prices has been led by meat products.
“I will say a lot of things important here, so strong export demands were pushing more products outside the United States; strong domestic demand, so as consumers had more money in their pockets, I think their demand for food has been incredibly strong, and that has pushed prices higher. On top of that, we’ve seen at least some slowdown in overall meat supplies over the last several months also contributing then to these higher meat prices. Things like dairy for example, that dairy CPI prices have been not growing as fast until the last few months. So, I go milk CPI for February was 11.2 percent higher than a year ago. We don’t have to go back very many months to find 1.3 percent growth in that retail milk CPI, so it’s a lot of variability across the board.”