American consumers first encountered rising prices shortly after the pandemic, when supply chain problems and labor shortages sent costs soaring for all sorts of goods. Fortunately, prices have finally started to fall again for products like appliances, used cars, and gasoline as well as services like health insurance. Still, inflation has not decreased evenly across the board, and the prices for some goods remain stubbornly high. Perhaps the clearest example of increasing costs occurs at the grocery store, where food prices have spiked by 25 percent over the last four years.
Not only is the food industry continuing to struggle with labor issues and logistical snags, but it must also contend with an avian flu outbreak and global climate disasters like droughts. So while food prices may not increase by much in the coming year, experts predict that they won’t be falling any time soon either. “I think people are waiting for prices to return to what they call ‘normal’ — and with the exception of a few things, like eggs — we’re not going to see that. We’re going to see prices stabilize, and that’s likely it,” said agricultural economist Dawn Thilmany. Price increases have been driven by just a few core categories, including beef, chicken, fruits and vegetables, and snacks.
It’s also possible that changing consumer tastes since the pandemic have made shoppers more accustomed to buying expensive food. “People started spending a ton on groceries during covid and for a large subset of Americans, that’s stuck,” said Thilmany. “They’re saying, ‘I’m still going to get that rib-eye or New York strip even if it costs more’ — and that pushes prices further up.” Of course, there are millions of Americans who can barely afford staple products for their pantries, let alone steak. According to one survey, two-thirds of respondents claimed that inflation hit them hardest through grocery costs. Sadly, relief at the register appears to be a long way off. “It wasn’t until last year — three years into the pandemic — that we made big strides on ending the labor shortages. So it’s going to take some time,” said economist Claudia Sahm. “Disinflation is not going to happen in all parts of the economy equally at the same time.”
Questions:
1. Why do food prices remain high even as inflation falls in other areas of the economy?
2. As a consumer, how have you adjusted your budget in response to increasing prices at the grocery store?