Finance

Thanksgiving inflation gobbles up budgets

High inflation is hitting the Thanksgiving spread.

Food prices rose almost 11 percent over the 12 months ending in October, according to the Labor Department’s consumer price index (CPI), while groceries, which exclude restaurants, specifically were 12.4 percent more expensive from the same time a year ago. 

And some Thanksgiving staples are even more expensive thanks to a combination of costly setbacks for farmers and food processors. 

Prices for poultry were up almost 15 percent annually in October, according to the Labor Department, thanks in part to a recent outbreak of avian flu. Premade baked goods, baking mixes and frozen desserts were also at least 15 percent more expensive last month than a year ago.

“As we’ve seen across the economy, American consumers are experiencing higher prices driven by a perfect storm of factors,” Laura Strange, senior vice president for the National Grocers Association, a trade group for independent grocery stores, said in a Monday email.

Labor shortages, higher fuel costs and wages, and supply chain snarls are some of the biggest price pressures, Strange explained.

Food prices began rising last year as a rush of activity unleashed by stimulus and COVID-19 vaccinations drastically boosted demand. Higher fuel prices made it more expensive to process and transport food, all while a historically strong labor market made it harder for businesses to retain workers and keep up steady production.

And just as inflation appeared to be easing early this year, the outbreak of the war in Ukraine poured more fuel on the fire. 

Russia’s invasion of Ukraine blocked crucial wheat shipments from the besieged country, which drove up prices around the world. Sanctions on Russia also fed a massive increase in oil, gasoline and fertilizer prices, which made it more expensive to raise, feed and process crops and livestock.

“Food prices across the supermarket are up, and turkey is also affected by that,” said Beth Breeding, senior vice president for the National Turkey Federation, a trade group for turkey raisers, in a recent interview.

Breeding said a sharp increase in corn and soybean prices — another problem created by the war in Ukraine — has made it much more expensive to feed turkeys, and high gasoline and energy prices also boosted processing and transportation costs.

“The feed is the largest cost in raising a turkey,” Breeding said. “When all of those inputs are going up, that affects the cost that it takes to raise the turkey.”

The average grocery store price of a fresh turkey hen last week was $2.23 per pound, up from $1.83 during the same time last year, according to Department of Agriculture (USDA) data released Friday. 

“There is a wide variant in prices throughout most regions. Fresh and frozen weighted average whole turkey prices increase when compared to the previous ad cycle,” the USDA explained.

But the price of a frozen turkey averaged around $1 per pound, just 7 cents higher than the same week in 2021.

“However, many lucrative values abound for both fresh and frozen turkeys helping to lure the customer through their doors,” the USDA report said.

Prices for food vary greatly by region and may depend in part on how badly a given state was hit by avian flu, severe weather or other agricultural obstacles. 

Roger Cryan, chief economist for the American Farm Bureau Federation (AFBF), said some shoppers may face “temporary, regional” turkey shortages that could make it harder or more expensive to get a bird, but that overall supply “should be adequate.”

The AFBF estimates that the average Thanksgiving dinner will cost 16 percent more than in 2021 — slightly more than $10 in additional costs — to a total of $64.05 based on October price data. Only fresh cranberries were less expensive last month than the same time a year ago.

“General inflation slashing the purchasing power of consumers is a significant factor contributing to the increase in average cost of this year’s Thanksgiving dinner,” Cryan said.

Even so, there may be some signs of potential relief for shoppers as they make their last purchases.

While poultry prices were still much higher than a year ago in October, according to the CPI, prices dropped slightly between September and October. The pace of food price growth also slowed slightly in October from the previous month, which could be a hopeful trend for cash-strapped buyers.

“Turkey gives you a lot of value for the amount of meat that you’re getting,” Breeding said, citing the low price of a frozen turkey.

“Where else can you get a pound of protein for that?”

Tags economy food costs Inflation Thanksgiving

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