Grocery prices rise 11.9% in a year, worst increase since 1979
Led by meat, grocery prices are rising rapidly, up 11.9% in the past 12 months — even faster than the overall U.S. inflation rate of 8.6%, said the government in the Consumer Price Index report. “We’re going to live with this inflation for a while,” said President Biden over the weekend, despite administration efforts to reduce prices.
Food is the largest consumer expense after housing, amounting to 13.4 cents of the consumer dollar. Like gasoline, up nearly 49% since last May, food bills are an informal and frequent test of Americans’ sense of economic well-being.
Rising food and gasoline prices will carry political consequences, said economists on a panel convened by the Brookings Institution. “It’s pretty obvious it’s not good for the incumbents, that’s basically my bottom line,” said one of them, David Wessel of the Hutchins Center on Fiscal and Monetary Policy.
The 11.9% surge in grocery prices was the largest 12-month increase since the period ending in April 1979, midway through President Carter’s tenure, said the Bureau of Labor Statistics (BLS).
All six categories of groceries increased sharply over the 12 months ending in May, five of them by more than 10%. The category comprised of meats, poultry, fish, and eggs had the largest increase, 14.2%. The price of eggs soared 32%. Dairy products climbed 11.8%, beverages 12%, “other foods,” including sugar, butter, and snacks, rose 12.6%, cereals, and bakery products 11.6%, and fruits and vegetables 8.2%.
For example, the BLS said a pound of ground beef sold for $4.50 a year ago but now costs $4.89. The average price for navel oranges was $1.55 a pound last month, compared to $1.32 a year earlier.
Groceries account for 60% of food spending. The rest, “food away from home,” includes restaurant, carry-out, cafeteria, and vending-machine food. It was up 7.4%, highest since November 1981.
The food index, combining groceries and food-away-from-home, “increased 10.1% for the 12 months ending May, the first increase of 10% or more since the period ending March 1981,” said the BLS. The food inflation rate has increased every month since May 2021, when it was 2.2%.
Higher oil and gas prices were the primary factor driving inflation, said Mark Zandi, chief economist for Moody’s Analytics, on social media. With 8.6% inflation, he said, “The typical family must spend about $450 per month more to buy the same goods and services they did a year ago.”
In speeches in California, Biden said prices were rising because of sanctions against Russia for invading Ukraine and a reduction in global petroleum supplies. “My administration is doing everything we can to lower the prices for the American people,” said the president at the Port of Los Angeles on Friday, where he pointed to efforts to reduce congestion at ports and called on Congress to pass ocean shipping reforms.
Later in the day, Biden said at a reception, “We’re going to live with this inflation for a while. It’s going to come down gradually, but we’re going to live with it for a while.”
The CPI report was available here.