At this time flour prices are on the rise by about 14% this year. Coffee is up 13.5%. Produce, such as canned fruits and lettuce, increases in price by as much as 14.6%. Restaurant menu prices will also increase, with a 7.2% rise. The food costs are rising at a faster rate than the corresponding rise in wages.
Inflation
The recent price increase in major grocery groups is a cause for concern. These rises range from 7.8% for fruits and vegetables to more than 11% for vegetables. The price hike has many causes, including the Russian invasion of Ukraine, which is a major wheat producer. Exports are at a standstill, and rising food prices are putting pressure on consumers across the board. Despite this, Texans are still paying less than $4 a gallon for regular gas.
The rise in food prices is likely to continue to increase in the foreseeable future. The Consumer Price Index for All Urban Consumers rose 10.8% over the twelve-month period ending in April 2022, marking the biggest annual increase since June 1982. The increase in prices was most marked for meats, poultry, eggs, and cereals. These items are already at their highest levels in two decades. However, these increases will have a positive impact on consumer incomes.
Trends
The U.S. Bureau of Labor Statistics (BLS) recently reported that the Consumer Price Index for all urban consumers rose 0.5% in December from a year earlier. Prices for both foods eaten at home and food bought away from home rose 6.5% and 7%, respectively, in 2022. This is not good news for consumers, but it does present an opportunity for saving money. Many shoppers will be able to make immediate adjustments that will make their wallets feel the pinch of higher prices in the near future.
Across the world, the cost of living continues to rise. Russia’s invasion of Ukraine has exacerbated this trend. In addition to rising input prices, the global economy has also been squeezed by the price of feedstocks. Meanwhile, sanctions on Belarus have further destabilized an already tight market. Overall, however, analysts expect food and energy prices to moderate in the next year. By 2022, however, the rise in prices of food will continue to slow.
Forecasts
The USDA’s Economic Research Service has updated its estimates of food prices in the next five years. The projected increases for fats and oils, fresh fruit and vegetables, sugar and sweets, and cereal and bakery products were all higher than their current levels in January and March. Prices for other staples, such as cereals, will increase by 7.5 to 11.0 percent in 2022. Overall, the food price increase is projected to reach a staggering 14.3 percent.
Although the outlook is relatively conservative, some factors may affect prices. The Ukraine war, for instance, is already affecting the price of some food products, so the USDA is raising the 2022 forecast for these categories. If the conflict continues, Ukraine could face a shortage of fuel and fertilizer. Likewise, Ukraine could be affected by sanctions, resulting in higher prices for grains and oils. Fortunately, the food price forecast is much more optimistic, and prices are expected to moderate in the next few years.
Trends in Canada
In a new report, researchers have forecast a five to seven percent increase in food prices in Canada by the year 2022. Compared to the past 12 years, this increase is expected to add $966 to the average family grocery bill. Food insecurity is expected to increase, along with adverse weather conditions and labor shortages. Overall, consumers will continue to value health and the environment, as well as local food supply chains.
The report shows that the price of meat will increase by just two percent, compared to last year’s record-highs. Other food items could see a five to seven percent increase, including bakery goods, vegetables, and dairy. Last fall, the Canadian Dairy Commission increased farm gate milk prices by $0.06/L. The final price sticker on a grocery store shelf will depend on transportation, packaging, and processing costs.