By: Vivian Kaleta
In March 2020, consumers went to grocery stores to find shelves empty. Demand for food increased drastically resulting in higher prices. Two years later, consumers are facing the highest annual grocery and restaurant prices in a decade. Mrs. Donna Barkowiak says that “the pandemic has forced her to re-allocate her budget to meet increasing food prices.” With two children, Barkowiak worries that organic foods are becoming hard to afford. “Processed foods are attractive because they are so accessible but they hurt your health the more you fill your diet with them. It's like an internal struggle.”
To pinpoint when the price increase started, experts look at the widespread closure of restaurants between March and April 2020 that sparked uncertainty in America’s consumers on future mobility leading to a rush to stock up. During this time, food prices faced the largest monthly increase since the 1970s (Lusk, 2021). Shortly after, fear of worker illnesses, specifically in meatpacking, closed down 40% of the total national processing capacity in May 2020 (Lusk, 2021). The food supply chain halted and retail meat prices skyrocketed. Because consumers spend relatively 15% of their food budget on meat, the influence meat has on price indices is extreme, which is why any disturbance in the meatpacking industry is detrimental. (Price, 2021).
Prices for raw agricultural commodities like wheat have also risen. The cost of agricultural chemicals such as fertilizers and pesticides has risen 50% over the past year making production more expensive (Gibson, 2022). Aside from the pandemic, the war in Ukraine has added further pressure as Russia is a major exporter of nitrogen, potassium, and phosphorus fertilizers (Gibson, 2022). In addition, wage rates in the food industry have also risen. The average weekly earnings of food production employees have increased 11.1% from before the pandemic in January 2020 to September 2021 (Lusk, 2021). Employment in most of these industries has fallen over the course of the pandemic. Challenges in finding workers to run businesses close to capacity in times of high demand has hurt prices.
Mr. Pravin Patel, a researcher in global supply chain management, adds another point of view when comparing food prices.“Consumer purchasing power has changed overall.” Mr. Patel explained that income levels have risen in the last 15 years.“Consumers’ salaries and food prices directly affect each other. Even if it doesn’t seem like it, a certain good could be more expensive in 2001 than it is now because incomes have risen.”