American parents saw last month the most significant increase in their food bills in 40 years amid rising energy and labor costs, as well as global supply chain issues, according to Reuters.
The food price index increased 10.1 percent in May compared to the same period last year. The U.S. Bureau of Labor Statistics reported on Friday, June 10, that it is the first increase of more than 10 percent since 1981.
Prices for food at home in the U.S. increased 11.9 percent in May year-on-year. In that category, chicken prices went up 17.4 percent, the largest increase ever recorded. The cost of milk increased 15.9 percent, while pork prices rose 13.3 percent. Also increasing were the prices of bacon (15 percent), coffee (15.3 percent), and fruits and vegetables (8.2 percent).
Higher fuel costs and workers' pay drive spike in food prices
Prices of food away from home, like at restaurants, also went up, increasing by 7.4 percent. So what is causing the spike? Experts told NBC News that it is a combination of factors. According to them, some of the highest costs for food come from fuel costs to deliver products and workers' pay.
Job postings for positions at food processing plants are at all-time highs right now, meaning there are more job openings than employers can fill. As a result, businesses have offered higher wages to workers, costs that are ultimately get passed on to consumers.
Fuel prices are also at record highs, which is a big deal for firms transporting large quantities of food. The cost of diesel fuel has soared even higher than regular gasoline amid refining capacity shortages, sending food prices to even higher levels.
Christine LaFave Grace, the executive editor at the industry publication Winsight Grocery Business, said that the war in Ukraine caused global supply issues, and drought conditions in key farming areas like the Western United States are also exacerbating the situation. Grace said it is a perfect storm, pointing out that Ukraine is a key grain provider.
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Fast food joints to increase prices soon
LaFave Grace said food industry analysts had shifted their expectations to when these persistent high prices begin to subside in the United States. She added that they are hearing more and more that there will not be a significant change until next spring. She said that everyone was saying that we're going to get back down to 4 percent (inflation) by the end of the year six months ago, and that is no longer the case.
The New York Post reported that fast-food joints like Shake Shack, Cracker Barrel, and McDonald's, have also signaled feeling the pinch because of the inflation that has been passed onto their consumers.
Food giant Kraft indicated that it would raise prices in August for multiple items, including Classico pasta sauce, Maxwell Coffee, Miracle Whip, and some deli meat.
