A dozen eggs or four sticks of butter at $8, milk at over $4 a gallon, groceries at $40 or more a bag, restaurant prices way up: Why has the cost of food spiked so much over the past year?
The Washington Examiner approached experts in diverse fields to answer this question. The answer that they all gave was that it wasn’t simply one thing.
EGG PRICES SOAR DESPITE OVERALL INFLATION FINALLY CRACKING
It’s not all inflation, cautioned Ryan Young, an economist and senior fellow at the Competitive Enterprise Institute.
“Overall inflation last year was 6.5%, mostly due to the Federal Reserve’s rapid money supply growth,” he told the Washington Examiner. “But food prices went up 10.4%. That leaves about 4 percentage points that inflation can’t explain.”
From a technical perspective, inflation has to do with prices going up because of changes in the money supply. More money is in the system, so the individual units are worth less. That happened economywide, but food prices surged even higher.
“Most of the extra damage comes from supply chain problems, protectionist regulations, and Putin’s Ukraine invasion,” he said. “That is why food prices went up by 0.3% in December alone despite inflation going negative.”
He pointed to the recent “baby formula debacle” as a “good example of what is happening.”
“Tariffs, labeling, and ingredient rules kept out imported formula on purpose, while large government contracts for food aid programs concentrated the industry into just four firms,” he said. “That’s why there was nowhere else to turn when a single factory shut down due to contamination. Prices skyrocketed because people weren’t allowed to use alternatives.”
And it’s not all supply chains, said Hitendra Chaturvedi, an Arizona State University professor specializing in supply chain management, though he admitted that supply chain problems played a role in raising food prices.
Chaturvedi gave several specific examples of food price hikes and broke down some of the causes. On eggs, he pointed to “avian flu (not supply chain related), lack of labor, feed, and the high price of packaging, and transportation.” Wheat was another perfect storm, where “drought in the central U.S. and Canada, lack of fertilizers due to war in Ukraine [resulted in] decreasing production by 30% and a price increase by 90%.”
For vegetable spikes, Chaturvedi pointed to the drought in California and general supply shortages. Meat prices had to do with a Texas drought and feed shortages. Cooking oil prices have gone up over the war in Ukraine and its attendant supply shortages, he said. Milk and cheese prices were made worse by the “lack of timely labor.”
He did think that drought had something to do with supply chains but was one step removed. Drought is caused by climate change, which is made worse “by us not managing our supply chain efficiently as more than 80% of greenhouse gases are from our supply chain activities.”
Yet it certainly isn’t all awful weather conditions making things harder for farmers, said Dillon Honcoop, the communications director for Save Family Farming.
“While many factors are driving increases in food prices, the reality is that farms are facing skyrocketing labor costs, huge jumps in input prices, and ever-increasing costly regulatory burdens,” he told the Washington Examiner. “Combine this with intense competition from countries around the globe that almost invariably have far lower wages and regulations, and you have an American farmer that is increasingly forced to either get big or get out, whether they want to or not.”
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While admitting that “some farms have seen higher prices for the food they produce,” he said to look to the other side of the ledger as well, where farmers “have also frequently experienced similar or larger increases in their costs, leaving them in ongoing economic uncertainty.”
Honcoop wasn’t optimistic about farmers in the United States. He warned: “This trend will only continue to worsen as regulatory and economic pressures continue to push American farms to the brink.”
