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Food a factor in highest inflation rate in three decades

With the U.S. inflation rate at 6.2% — the highest it’s been since 1990 — President Biden said the government was on the alert for price gouging as it worked to remove bottlenecks in the supply chain. Inflation has been on the rise since February, with soaring food prices, often led by meat, as an important factor.

Beef and bacon prices were up by 20% since last October, said the Labor Department in its monthly report on inflation. Prices were up almost across the board, with exceptions for airline fares and alcohol. Gasoline prices, for example, were up by 50%, and used cars cost 26% more.

“Inflation hurts Americans’ pocketbooks, and reversing this trend is a top priority for me,” said Biden in a statement on Wednesday. The Federal Trade Commission will “strike back at any market manipulation or price gouging in this sector,” he said. “Other price increases reflect the ongoing struggle to restore smooth operations in the economy in the restart” from the pandemic.

Overall, food prices were 5.3% higher than they were a year ago, according to the Consumer Price Index report. Grocery prices were up by an average of 5.4% and food-away-from-home prices rose by 5.3%. “The index for limited-service (fast food) meals rose 7.1% over the last 12 months, and the index for full-service meals rose 5.9%, both the largest 12-month increases in the history of the respective series.”

While all sectors of groceries posted higher prices, meat stood out. Beef was up by 20%, with steaks costing 24% more. Ground chuck cost $4.87 a pound, compared to $4.21 the previous October. Pork prices were up by 14%, with bacon up by 20% and pork chops by 16%. Chicken cost 8.8% more than it did the preceding October, and seafood was up by an average of 7.5%.

Americans spend 14¢ of each $1 of disposable income on food: 7.7¢ for groceries and 6.3¢ on restaurant meals, carry-out food, cafeterias at school and at work, and vending machines. By contrast, about one-third of the consumer dollar is spent on housing, energy accounts for 7¢, and new and used vehicles are a combined 7¢.

The meat industry says labor shortages, “up and down the food supply chain,” including processors, shippers, farmers and retailers, are to blame for higher food costs. The North American Meat Institute said at a House hearing last week that labor availability limited the ability of meatpackers to operate at full volume. COVID-19 outbreaks slowed or temporarily halted production at some of the largest U.S. slaughterhouses in spring 2020. The solution, the industry says, is to allow companies to hire guestworkers from overseas to work year-round at the plants.

Consumer prices were 6.2% higher in October than a year earlier, “the largest 12-month increase since the period ending November 1990,” said the Bureau of Labor Statistics.

Produced with FERN, non-profit reporting on food, agriculture, and environmental health.
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