One central problem has plagued the Biden administration for most of its term in office: the sharp rise in food prices.
Polls have consistently found that inflation remains a top concern for voters whose budgets have been slashed. A YouGov poll released last month found that 64 percent of Americans call inflation a “very serious problem.” And when it comes to inflation, several polls have suggested that Americans are most concerned about food prices.
Despite the gloomy trend in food prices, price increases have been declining overall for months. On Wednesday, new inflation data for July will show whether the trend has continued.
Economists in a Bloomberg survey expect overall inflation to have risen by 3 percent year-on-year, matching the 3 percent increase in June. Such a reading would likely prompt Federal Reserve officials to cut interest rates in September. Investors, who have recently been unsettled by signs of an economic slowdown, see rate cuts as a support for the markets.
Some voters have blamed President Biden for rising prices, pointing out that food prices have skyrocketed over the past four years. Former President Donald J. Trump cited food costs when he accepted the Republican nomination last month, saying he would “make America affordable again.”
In the year to June, food prices rose by 1.1 percent, a significant slowdown from their recent peak of 13.5 percent in August 2022. However, many consumers are unlikely to see any relief as overall food prices have not fallen but continued to rise, albeit at a slower pace. Compared to four years ago, food prices are up by about 20 percent.
The price increase is the result of a mix of supply and demand pressures, many of which are related to the pandemic and other global events over which the White House has little control.
What led to the increase in food costs
After the pandemic hit, consumers stopped going to restaurants and panicked and hoarded food. Workers contracted Covid, making it difficult to staff grocery stores, warehouses and meat processing plants and increasing costs for businesses.
Then, in early 2022, the Russian invasion of Ukraine drove up energy prices and the cost of raw materials such as grains and vegetable oils. This, in turn, increased the cost of producing and transporting food. More recently, droughts and an outbreak of bird flu have put additional strain on food supplies.
The confluence of these events has made food more expensive as companies have passed on the cost increases to consumers. The average price of a dozen large eggs, for example, has nearly doubled from four years ago, from $1.55 to $2.72. Prices of cereals and baked goods have risen by about 25 percent over the same period, while fruits and vegetables have become about 14 percent more expensive.
These price increases are largely due to the costs of transporting, packaging and processing food, says David Ortega, a food economist at Michigan State University. “The majority of food costs are caused by things that happen once the food leaves the farm gate.”
As supply chain problems have eased, grocery inflation has returned to levels closer to typical pre-pandemic rates. That's good news for consumers, but, Mr. Ortega noted, shoppers should not expect overall grocery prices to drop significantly any time soon.
“We will not return to the prices we were used to before Covid,” Mr Ortega said.
But wage growth is now outpacing food price increases, he said, citing a recent White House analysis that found that the average non-management worker needs about the same number of hours to buy a week's worth of groceries as in 2019. But because wage growth has not kept pace with rising food prices for a while, consumers have had a “very difficult time” and not everyone's wages have kept pace with rising prices.
Where food prices are heading
Several economists expect food inflation to remain at current levels in the coming months, barring unforeseen shocks. The Department of Agriculture forecasts that “food at home” prices will rise by 1 percent in 2024, compared to 5 percent last year.
“We’re pretty much where you’d expect food prices to be,” said Omair Sharif, founder of research firm Inflation Insights.
Inflation has been higher than normal in some categories recently, noted Sharif, with beef and veal prices rising 5.1 percent in the year to June.
However, economists have also noted that the prices of some products have fallen. Ham prices have fallen by 4.3 percent compared to last year. Prices for milk and seafood have each fallen by 1 percent over the same period.
Climate-related disruptions could strain food supplies in the coming months. Meagan Schoenberger, senior economist at KPMG, said a very active hurricane season this year could wipe out entire crops.
“The more disruption there is, the higher food inflation will be,” she said.
Food price inflation remains a major political issue
High food prices continue to pose a political challenge for the Biden administration. During the campaign, Vice President Kamala Harris, the Democratic presidential candidate, acknowledged that prices were too high and vowed to crack down on price gouging on “day one.” In recent months, Biden has accused food and beverage companies of making excessive profits and called on grocery chains to cut costs.
Some food companies have indicated they plan to cut prices on certain products in response to consumers' reluctance to spend. Last month, PepsiCo executives said they planned to lower prices on certain salty snacks and other products or offer more special offers after years of rising prices.
Many shoppers remain frustrated, says Christopher B. Barrett, an agricultural economist at Cornell University, because they are struggling with general price increases that are putting a strain on other parts of their budget.
“Housing costs in particular have risen sharply since the pandemic began,” Barrett said. “This is limiting people's ability to buy the food they need.”
Jerlyn Heisz, 79, a retired nursing assistant from Platteville, Wisconsin, said her monthly grocery costs have risen from about $100 before the pandemic to as much as $150. At the same time, her rent and utility bills have also increased in recent years.
“I really can’t afford anything beyond the bare necessities,” she said.
Ms. Heisz, who lives on a monthly income of $1,500, said she has noticed her money is not going as far as it used to, although she is buying fewer fresh fruits and vegetables. She said it has been about two years since she last bought a steak.
Still, Ms. Heisz, who described herself as a “lifelong Democrat,” said she did not blame Mr. Biden for rising food prices.
“I don’t think it’s any one person’s fault,” she said.